WDIK Posted August 2, 2010 Posted August 2, 2010 A client received a $16,000 penalty notice from the IRS today for a plan that ceased to exist around 1994. Apparantly the Form 5500 actuarial information for this profit sharing plan was not signed by an actuary. ...but then again, What Do I Know?
Andy the Actuary Posted August 2, 2010 Posted August 2, 2010 Interesting. I heard that Jack Benny recently received a recall notice for his Maxwell. Must have come from the same source. The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.
david rigby Posted August 3, 2010 Posted August 3, 2010 Well....., I've seen similar problems that were traced to a plan sponsor incorrectly re-using a plan number of a (long ago) terminated plan. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
masteff Posted August 3, 2010 Posted August 3, 2010 Presuming that 5500 tax penalty notices are the same as others, it should specific the applicable year on it. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
WDIK Posted August 3, 2010 Author Posted August 3, 2010 Well....., I've seen similar problems that were traced to a plan sponsor incorrectly re-using a plan number of a (long ago) terminated plan. The plan number issue I can understand, but an actuarial statement? The client has never had a defined benefit plan. Presuming that 5500 tax penalty notices are the same as others, it should specific the applicable year on it. The penalty was for the 2007 plan year. ...but then again, What Do I Know?
pkfountain Posted September 8, 2010 Posted September 8, 2010 Ok the IRS has really done it this time - We filed a Form 5500SF with EFAST2 through Relius webclient system. The plan year ended 12/31/09 - FormSF was filed with DOL on 07/15/10. (The due date was 07/31/10). DOL acknowledged receipt on 7/15/10 - with zero errors. On 9/4/10 IRS sends the client a letter with a penalty of $1300 indicating the Form 5500SF for plan year ended 12/31/09 was filed late. In addition, they (IRS) indicate in their letter that: 1) return was not signed and 2) Your Actuary information was not signed by an actuary. This is a small 2 person 401k plan. We have checked and rechecked the EIN, plan no., charachteristic codes, etc. Nothing on the 2 pages indicates anything relating to a DB Plan. Anyone else with these issues?? Patricia
Belgarath Posted September 9, 2010 Posted September 9, 2010 Patricia - we just got notified by one of our clients that they received a 5500 penalty notice for a 12/31/2009 filing. I haven't seen the penalty notice yet, but the form was electronically filed (timely!!) and achnowledged by the DOL - no problems, issues, no nothing. Unbelievable. Does anyone have any ASPPA contacts who know some people at the IRS who can actually get something done? Someone needs to have their head removed - this is becoming absurd. Update - saw the letter. Exactly the same - said the actuarial information wasn't sent, etc. - and whether this is coincidence or whether 7/15 is the problem - this form was submitted on 7/15 just like yours.
K2retire Posted September 9, 2010 Posted September 9, 2010 We've had several clients who received these notices. All of them were filed July 13 so apparently it's not just the ones on the 15th. The DOL has acknowledged receipt of the filings. The EFAST website shows the signed and dated form. Update: According to Michelle Selim, agent 0144916, with the IRS, these letters were generated because the client has registered as something other than "filing signer". To correct it, the client must write a letter to the IRS requesting abatement of the penalty and enclose a manually signed and currently dated copy of the the signature page of the form. Does that answer make anyone else nervous?
WDIK Posted September 9, 2010 Author Posted September 9, 2010 This electronic filing stuff is as smooth as sandpaper... ...but then again, What Do I Know?
Belgarath Posted September 10, 2010 Posted September 10, 2010 K2 - we'll check into that angle. Of course, even that doesn't explain the request for actuarial information on a 401(k) plan...
K2retire Posted September 10, 2010 Posted September 10, 2010 K2 - we'll check into that angle. Of course, even that doesn't explain the request for actuarial information on a 401(k) plan... I agree. And sending a signature page with a new date seems to open up the possiblity of fines for late filing.
mbozek Posted September 10, 2010 Posted September 10, 2010 We've had several clients who received these notices. All of them were filed July 13 so apparently it's not just the ones on the 15th. The DOL has acknowledged receipt of the filings. The EFAST website shows the signed and dated form.Update: According to Michelle Selim, agent 0144916, with the IRS, these letters were generated because the client has registered as something other than "filing signer". To correct it, the client must write a letter to the IRS requesting abatement of the penalty and enclose a manually signed and currently dated copy of the the signature page of the form. Does that answer make anyone else nervous? As the 40th president of the US was fond of reminding voters "Be glad you dont get all of the government you pay for." If you think this is bad wait until heath care reform takes effect in 2014. mjb
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