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A failure to deposit deferrals timely is not a qualification failure that can be corrected under VCP. There's nothing in 401(a) that says that you need to make timely deposits. It's not a qualification error unless it rises to the level of being a misuse of plan assets or embezzlement. The fact that the amount of money involved is $2,500 would indicate it is not that. You cannot get excise taxes waived under VCP. And, the IRS cannot generally waive excise taxes anyway. So, what I would do is file the late Forms 5300 with the excise tax amounts, which should not be very large if the principal amount is $2,500, since the excise tax is based on the interest, not the principal, of the late payment. File the Forms with a letter explaining why the forms are late and requesting waiver of late filing penalties. If you are assessed penalties, they are (a) interest on the unpaid tax balance at IRS rates, (b) a late filing penalty of 5% of the unpaid tax for each month up to a maximum of 25% of the unpaid tax. This can be waived if the IRS gives you the waiver for reasonable cause, and (c) a penalty for late payment of the tax, which is 1/2 of 1% of the unpaid tax per month, up to a maximum of 25% of the unpaid tax. This is also waivable for reasonable cause. There is also some chance that the IRS would assess the second level excise tax of 100% of the amount involved (i.e., the interest on the late payments). So, you can see form this that the penalties for late filing of the Form 5330 are not gigantic. Just do it, hope for the waiver, but know that it's not going to be ridiculous even if the waiver isn't granted. This is, of course, just my thoughts as an accommodation for those on BenefitsLink and should not be construed as legal advice.

https://www.irs.gov/retirement-plans/self-employed-individuals-calculating-your-own-retirement-plan-contribution-and-deduction

Re trustee - it’s an owner-only plan. Usually the owner is the trustee, no? The bank is just the custodian. They still shouldn’t be allowed to switch the account type though. Move the money quick.

Unfortunately this raises questions about past practices, like whether full appraisals were done every year. Assuming yes, about which I have to be skeptical, then I think the only option would be to carve out these illiquid assets and leave them as pooled and the rest self-directed. If the owner keeps them you have a BRF issue as noted.

BRF

Assuming you are talking about a DC plan, it is a circular calc; it boils down roughly to 25% of (covered) W-2 comp plus (roughly*) 20% of Schedule C. *There is an adjustment for 1/2 of SS taxes; after that it is 20%. Also note the Schedule C should reflect the employer contributions for employees, so if you are a TPA and are given the raw Schedule C by the accountant, you have to adjust for that as well.