Part III. – Flagging Out-of-State Drivers: Let Me See Your License and Registration (Commentary Summary)
The IRS will be subjecting small businesses, those with less than 100 employees which have a 401(k) plan to additional inquiries. (This reminded me of the practice of setting up speed traps in small rural towns to ensnare out-of-state drivers – flagged for speeding and being too far from home to fight the fine, they simply pay. Of course, it also reminded me of the IRS / Tea Party scandal as well.)
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Part III. – Flagging Out-of-State Drivers: Let Me See Your License and Registration
“Vogon poetry is mild by comparison.”
In this arcane and convoluted regulatory world there are different rules for different groups with different forms to be filed, provided that different requirements are met.
It’s all so confusing to many. We only need to focus on one group and one form.
Employers with less than 100 employees – small businesses – that have a retirement plan are required to annually file IRS Form 5500-SF (short form). However, there is the additional requirement that the funds held in the retirement accounts be invested in “eligible plan assets.” This simply means that the assets must be held by a regulated financial institution such as a registered broker-dealer.
If brokers become reluctant to take “small accounts” because of the new “Fiduciary Rule”, how and where are individuals and small businesses to invest their retirement funds?
“Round up the usual suspects.”
With regard to this “short form”, new “IRS Compliance Questions” have been added (Part IX on page 3). These questions specifically target the 401(k) plans of small businesses. The nature of the questions are the same as those that would be asked should the IRS conduct an audit of an individually selected plan. While the questions do not need to be answered this year, they do signal the intent of the IRS. Effectively, the IRS will be conducting an audit of these small business 401(k) plans en masse next year, and perhaps for years to follow.
This is just a bit too reminiscent of the IRS / Tea Party scandal of a few years ago – singling out small groups, small businesses, and subject them to further intense scrutiny. To what end? To advance an agenda?
