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socrateaser, Lawyer
Category: California Employment Law
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Experience:  Retired (mostly)
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I forgot to ask earlier. So, who is supposed to be responsible

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I forgot to ask earlier. So, who is supposed to be responsible advisor in alerting the client about this kind of problem. The accountant? Many times, husband and wife's business may have different pension administrators. In my experience, pension administrators, do not ask the business owner anything about the spouse or his/her business. Also, in the previous example, if the wife gives away her 50% interest to her children, would that be considered divestiture?
The term, "accountant," means a lot of different things. A CPA is entitled to provide de minimis legal advice in connection with the CPA's professional duties. This would likely include a discussion of requirements necessary to generally avoid liability to the IRS for a violation of ERISA. However, given the very complex regulations involved, it's possible that a CPA could avoid liability for malpractice concerning this specific issue, because, for example, a CPA is not expected to understand California community property law.

So, with regard to a CPA, it's uncertain as to liability, and it would depend on what the CPA actually advised -- given that a thorough discussion of ERISA is more than de minimis, so arguably the CPA would be engaged in the unauthorized practice of law, to provide comprehensive advice on the subject of retirement planning.

A similar set of arguments would probably apply to a licensed investment advsor or investment broker. Though, I'm fairly certain that a CPA would be given more lattitude than licensed investment professionals.

An "IRS Enrolled Agent" (and any other IRS or state licensed tax professional -- other than a CPA), is only entitled to provide tax advice in connection with the preparation of a tax return, or representation of a client before the IRS. Thus, unless the EA was acting as a tax professional for the various business entity retirement plans, the EA would be engaged in the unauthorized practice of law, to provide advice as to how to avoid a controlled group attribution by the IRS (or any other ERISA-related advice).

A "certified financial planner" is not a government-licensed professional -- so, despite the formidable requirements for certification, a CFP can't give any tax or legal advice at all without engaging in the unauthorized practice of law or accountancy. Thus, a CFP is always liable for failing to immediately advise a client to seek legal representation, when discussing the details of ERISA.

A "bookkeeper" is also not licensed by the government, and would be immediately liable for any advice provided concerning accounting or tax law. A bookkeeper's authority is limited to addition, subtraction, multiplication and division, in connection with maintaining the accounting records of a client.

As you can see, liability depends on the definition of "accountant," under the circumstances.

Ultimately, the taxpayer is liable for violation of the Internal Revenue Code, because the taxpayer signs the bottom of every return under "penalty of perjury." So, if a taxpayer return contains a misrepresentation of the taxpayer's obligations concerning an ERISA-qualified retirement plan, then the taxpayer is liable for the misrepresentation, whether or not inadvertent.

Concerning your question about wife giving away her 50% community property interest to her children -- wife could do so during life -- via an irrevocable trust. A spouse in California is always the owner of his or her one half community interest in the marital estate -- so, the spouse can alienate that interest to an adult child and thereby avoid the controlled group regulations -- assuming that all four of the previously discussed sub-paragraph requirements are met.

Hope this helps.
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