"I’m handling a takeover plan where assets were incorrectly reported on the 5500. The plan is brokerage-held with separate accounts, but one of the accounts was excluded from the 5500 filings dating back to 2020. I plan to amend the filings, but are there any penalties associated with this type of issue?"

"We learned that a CPA was deducting a sole proprietor's deferrals on his 1040 for some years when we were record keeping it as Roth as the client intended. We will see if the client wants to amend 3 years but obviously the plan recordkeeping must be fixed since this information has come to light. It goes back a number of years further than the 3-year amendment period. It is a brokerage account not a recordkeeping platform so we reclassify in our admin system. The client seems to be blaming us and is saying how he lost all this Roth opportunity. Our questions -- did you look at the reports we provide you each year? Did you ever mention Roth to your CPA? The CPA just stuck the 415 max on his 1040.

"I will recommend Roth conversion for a couple years which will reinstate him back to where he wants to be for the most part. And I will recommend adding a DB plan to offset the income. He's a perfect candidate. He mid 50's, makes $900,000+ and just has 4 younger eligible employees. He's complaining about lost opportunity because he's says he's in 41% tax bracket now and when retired will be 20%. He's got this backward! I estimate that in 15 years his RMD might be $100,000 so if he pays 20% in retirement but saves 41% now -- what is the problem.

"My approach will be -- the tax deduction for years has saved you tremendous amount of taxes. And when distributed you will pay tax at a much lower rate than what you saved up front. I know some will say -- what about tax-free earnings on Roth. I did an analysis years ago which showed that if the tax rate is the same front end and back end and if tax savings are invested and earn the same rate as the plan, there is no difference between Roth and Regular in total payouts over retirement years. I know it will be tough to get the client to understand this.

"There was a good article by Larry Starr in the early Roth years. I will try to find that. He made good points as to why Roth isn't all its cracked up to be. Does anyone know of any good published piece questioning the value of Roth for some? I realize for some it is a good option -- low income, those starting out in careers. And I realize funding as Roth most often results in better retirement readiness because most don't save and invest the tax savings when funding as regular."

"TL:DR--Does Fidelity monitor 402(g) limits for individuals who participate in two unrelated plans if both those plans happen to be recordkept at Fidelity? I work in an industry that employs highly-compensated people who are often highly-compensated by two employers and are eligible to contribute to two 403(b) plans. We inform people in a number of ways that the 402(g) limit is a 'person' limit as opposed to a separate limit for each plan to which they contribute. Usually our 402(g) refunds are due to new employees who contributed to both their old and new employers' plans, but I have a case now which I have never seen before. We received an email from a participant who has two current employers and contributed the max to both plans for the years 2018-2024. (2018 was the first year she contributed to ours.) Our advice was 'get thee to a tax advisor ASAP' but her response was interesting. We had previously had our plan recordkept at Fidelity but changed recordkeepers in 2019. Her other employer's plan is still recordkept at Fidelity and she says that in the past Fidelity had enforced the 402(g) limit because they had access to the salary deferral data for both plans. She blames her overcontribution on our recordkeeping switch--although that does not explain how she was allowed to defer twice the annual limit in 2018. In all my many years in this position I have never seen Fidelity limit any of our participant's salary deferrals based on their deferrals to another plan. They would give us regular monitoring reports and stop our participants' deferrals when they reached the max in our plan, but never, as far as I can tell, based on activity in another employer's plan. Fidelity clients, does this make sense to you or is this participant just trying to deflect the blame from her own lack of attention? I don't imagine this population prepares their own tax returns but I guess it is possible, but it surprises me that a tax preparer or the IRS themselves has not picked up on this before now."