Schedule I, Line 4a

[Archimage]

I have a client that answers YES to the question, "Did the ER get the deferrals into the trust on a timely basis". However, I know they did not get them in under the legal limit of 15 business days. Does anyone know of any guidance from the IRS regarding the 5500 preparer's responsibility in this situation?

[Belgarath]

I don't have any specific guidance for you, but I'll be glad to share how we handle it. (And you are actually now dealing with the DOL, and in my experience they can be downright nasty! The IRS is tame by comparison)

We tell the employer to do it by the book - i.e. - fill it out correctly. If they don't, we terminate our service contract. Actually, on a 401(k) where they are late with deferrals, we send them a letter the first time or two, then we cancel immediately, usually long before 5500 forms come into play. Maybe that's overly conservative, but we just don't want to be involved in any knowingly false government reporting. I think I've seen, in the past, some instances where TPA's got dragged in. Hopefully some of the other folks out there can provide you with more specific information!

[JohnCheek]

I would point out to the administrator that the downside of reporting honestly--- reporting a prohibited transaction on Schedule G, making the plan whole by paying the lost income, and paying the excise tax -- is a lot less onerous than the effect of being caught filing an answer that is clearly wrong. I would point out the penalties for failing to file a "complete" report, and that the administrator is signing the 5500 under penalty of perjury.

And finally, I would note that a participant complaint is the most likely cause of a DOL visit, and participants have an uncanny way of getting upset about late contributions, so there is a good chance that DOL could find out about late payments even if the 5500 does not report them.