We have a 401K plan that the employee deferrals have been sent late several times during the year. All the contributions have been sent in, they were just late. I have entered all the information for the late contributions in the VFCP online calculator and found the Total Lost Earnings to be $380.74. From what I understand we need to send the $380.74 to the plan and file a 5330 to pay the 15% excise tax and indicate on the 5500 that late contributions were made.

My first question is on calculating the 15% excise tax do I include the amount of each deferral contribution that was sent late during the year? For example, if there were 3 contributions that were sent late and each was $5000 would the excise tax be (5,000 + 5,000 + 5,000 + 380.74) x 15%?

My last question is what is the cost for applying under the VFCP? The plan has less than 20 participants. Is the cost the same as the VCP chart (20 or fewer = $750)?

Any help will be greatly appreciated!

Tried to send a reply and my 7 thumbs botched it somehow!

First, do you qualifiy for excise tax relief under PTE 2002-51?

If not, take a look at Revenue Ruling 2006-38. I think you'll find that the excise tax is a lot less than you think! The "amount involved" in this particular situation is not the principal amount.

I think there is no application fee or filing fee for the EBSA VFCP.

Can anyone correct or confirm?

Tax for late deferrals is based on interest owed, not value of deferrals. Usually best to just pay the tax. No fee for filing. Did one last fall. No problem.