SHNEC not contributed for Partners

[Spencer]

Plan terminated in 2010. Partners do not want to make SH contributions for 2010 for themselves. They did not defer and did not realize that they still were required to deposit the SHNEC for themselves. Plan has two partners/HCEs and two non-HCEs. SHNEC was contributed for NHCEs.

Other than advise them that this a violation of the terms of the written plan document and that they are risking disqualification, what is my responsibility?

They seem willing to take this chance. Must I report this failure to contribute?

Thanks!

[ETA Consulting LLC]

They seem willing to take this chance. Must I report this failure to contribute?

Thanks!

To whom? I'd just document the conversation and move on. If it becomes an issue later, you have documentation showing they you gave them proper information. It is there responsibility to ensure the plan is operated according to the terms. You provided a service by explaining to them, in detail, what that means. You did your part; just keep documentation showing that and you'll be fine.

Good Luck!

[Spencer]

I've written a letter stating the risks and possible consequences and I have it writing back from client that they are willing to accept risks. But Powers That Be here want to be sure we are covered. Thanks for your input.

[QDROphile]

So are the Powers That Be now sure that they are covered?

[Spencer]

So are the Powers That Be now sure that they are covered?

Yes. I'm the only EB person at a CPA firm so sometimes I need a second opinion to convince them we're okay.

Thank you!

[QDROphile]

Wow. They are easy to console. What other critical business or legal advice do they rely on from unaccountable anonymous strangers based on twitter-depth descriptions?

ERISAtoolkit's response is probably corrrect and the way it should be in most relationships. But there may be some other factors to consider, especially if you provide other services that might make you a tax return preparer or involve you in some way with reporting. Apart from facing the potential liability of the preparer or reporter, you might want to warn the client that you might not be able to perform the services or that you would have to report something that would be adverse to their scheme.

[Spencer]

Wow. They are easy to console. What other critical business or legal advice do they rely on from unaccountable anonymous strangers based on twitter-depth descriptions?

Not that it is any of your business, but this wasn't the only source with which I checked. I just usually post here first becuase I get quick responses. And then I can provide multiple sources backing up my advice to the partners.

We have been able to convince them since I posted to make the SH contributions. Problem solved.

Thanks, ERISAtoolkit.

[ETA Consulting LLC]

Thanks, ERISAtoolkit.

You're welcome