Bill Sweetnam

Who is the trustee of the plan or the investment fiduciary? Years ago when I did retirement work, the company I represented had senor management (including the CFO) on the 401(k) investment committee. That committee clearly was a fiduciary and that committee could have realistically made the reps and warranties related to the 401(k) sponsor's business. (that committee was never asked to give reps and warranties but I was concerned when there was a tender offer and I made sure that the investment committee hired an independent consultant to review the tender offer.) If the buyer is really pushing, look to who in the plan's fiduciary structure is in the position to provide accurate reps and warranties.

My initial thought is to get an ERISA lawyer who deals with ESOP fiduciary issues to help you. Often in these situations the trustees of the ESOP may be the managers of the company and they may be the ones that are looking to change things around. The ESOP trustees must work solely for the benefit of the ESOP participants,. The DOL has strong opinions on the valuation of ESOP securities and it would be good to have a lawyer that is expert in this area help you. You might need two lawyers -- one for the ESOP trustees and one for the minority shareholders who are trying to get control of the company through the purchase of allocated and unallocated shares from the ESOP.

In order for there to be a further extension, the IRS would have to affirmatively issue new guidance with that extension. The reason behind Code section 7508 and 7508A was that the there was an automatic extension of time in presidentially declared disaster areas and for other purposes. So if that automatic extension is not helpful, the industry would have to ask the IRS to issue guidance for a further delay of the 5498 filing deadline. They are pretty busy at the IRS and Treasury on a lot of issues dealing with the effects of the COVID-19 pandemic, so it might be difficult for this issue to be considered a priority.

Lois has it right. Internal Revenue Code sections 7508 and 7508A provide for the automatic postponement of certain deadlines under the Code by reason of a presidentially declared disaster. IRS Rev. Proc. 2018-58 lists the tax deadlines that will be automatically postponed under these Code sections; Section 8.13 of the Revenue Procedure provides that the filing date of the IRS Form 5498-SA is one of the tax deadlines that is automatically postponed pursuant to Code section 7508 and 7508A. IRS Notice 2020-23 provides that, due to the COVID-19 pandemic, everyone is under a presidentially declared disaster, so any person that has to meet a deadline under the Code between April 1, 2020 and July 15, 2020 has until July 15, 2020 to take the action to meet that deadline. Consequently, IRS Form 5498-SA that was required to be filed by May 31, 2020, will now have to be filed by July 15, 2020.

In a series of questions and answers regarding FFRCA payment, the IRS said this: “The FFCRA does not distinguish qualified leave wages from other wages an employee may receive from the employee’s standpoint as a taxpayer; thus, the same rules that generally apply to an employee’s regular wages (or compensation, for RRTA purposes) would apply from the employee’s standpoint. To the extent that an employee has a salary reduction agreement in place with the Eligible Employer, the FFCRA does not include any provisions that explicitly prohibit taking salary reduction contributions for any plan from qualified sick leave wages or qualified family leave wages.” Here is the link to the Q&As: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs Bill Sweetnam

The main question is how is the PEO arrangement to be structured. Are the employees of the 501(c) organization going to become employees of the PEO or will they remain employees of the 501(c) organization? The answer to that question will tell you whether the 501(c) organization has employees which can continue to contribute to the 403(b) plan or if, as employees of the PEO, they will be able to contribute to the PEO's 401(k) plan.