Retroactive Amendment adding participating employer

[austin3515]

How do people feel about using EPCRS SCP to retroactively add a participating employer if the related employees were allowed to participate?

The entity was small relative to the existing employer and all were NHCE's.

The SCP for this appears tor reference situations where employees were allowed to participate before completing the initial eligibility age/service requirements. It just seems like this issue is so materially similar that it would pass muster.

[rcline46]

Do it. We feel it is the same as early entry.

[KJohnson]

I remember asking this at the mid-Atlantic conference a number of years back under 2003-44. They originally said ok for SCP and then came back later in the Q&A session and said no --that VCP was your option here.. At that time the provision was just "ineligible employee.' I think then in 2006-27 and later iterations they changed it from "inclusion of an ineligible employee" to "inclusion of an otherwise eligible employee" maybe in an attempt to make it clearer?

[austin3515]

Well, I weigh the level of risk involved with the hefty VCP fee (not to mention professional fees) and say to myself, "Self, this is really the same thing."

[austin3515]

Note too that I could self correct this under SCP by refunding 100% of the ineligible contributions to all of these hardworking NHCE's which my client would be inclined to do since the VCP fee is $5,000 (not counting legal fees). How about that for an argument?

[Belgarath]

I think you'd have to get stuck with an awfully hard-line auditor to give you a problem over this. It is just such a common sense solution, benefiting everyone and hurting no one, as well as truly being in the spirit of voluntary compliance.

I'm feeling mellow today (so far) so I'm projecting my mellow attitude to apply to IRS auditors.

[austin3515]

Do you think my last post is a valid defense? I could have stuck it to the employees under SCP hard-core.

[Belgarath]

I'm just guessing, that an auditor that challenges this in the first place is unlikely to be swayed by your last point. They might just say, "Then that's what you should have done."

But I revert to my original theme that I have found most auditors to be fairly reasonable, and doubt that they would give you a hard time on this anyway.

And my opinion and $50.00 will get you a 2 oz. espresso at Starbucks...