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..blah, blah, blah...and they never filed a 5500. Delinquent filer program or try excuse letter first?

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We go out of our way not to handle 403(b) plans, but I'm trying to advise a prospect as a favor. Client is a non-profit and has a 403(b) with a discretionary employer contribution and the new HR person has discovered that no 5500 has ever been filed. At this point, I tried hanging up, but she called back before I could have our number changed. My question is whether or not to suggest DFVCP. At a Corbel seminar a while ago, one of the pension attorneys suggested instead writing an excuse letter to go along with the late forms. Has anyone had experience with this?



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This prior discussion gives some opinions. With the delinquent filers program, you know up front what your maximum exposure would be. With the "excuse letter" you are taking some risk. I would present both options to the client and let them decide.

One other thing to consider, the DFVC Program can only be used if the filings are made prior to notification of failure to file a timely return by the DOL.

...but then again, What Do I Know?

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I recently used the DFVC to file 27 5500 forms for a 403(b) plan because there is no IRS penalty. Cost is $1500 for small plans, 3k for large plans regardless of how many 5500 forms are filed. Filling out a 5500 form for 403(b) requires the same information except for the year. Only about 7 questions. But first confrim that employer is a np that must file 5500s and not a govt instrumentality. I would not recommend the excuse letter because the DOL will know that the er is and would likely target the plan as a non filer and impose penalities. The excuse letter will not be accepted because of the low Dol penalty for correcting 5500 failures.


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