Late EE deposits

[Guest LTurner]

employer has deposits automated to be ACHed or wired out of their checking on the day of payroll. This is triggered by the investment company when they receive the list bill. However, somehow one got missed in Feb and one in Mar of 2003. They discovered in Apr and immediately sent it in.

I am reviewing what needs to be done, and from what i can see, the VFCP is an application process that has no forms. Apparently it is up to the fiduciary to 'submit' this...

Does anyone have any sample documents we could review to see the format that could be used?

Also, if we do the 5330 and the VFC application, do we still indicate on the 5500 that funds were deposited late?

[Guest planman]

We just submitted a VFC application for deposits that were late in 2002. We struggled with the format also. We put together a big package using the checklist from the DOL and tried to use language just as listed in the regs and their information. It took us a long time to determine additional earnings and update them to participants, so we also supplied all those calculations. We have no idea of the response time and hopeful to receive a no action letter.

[Guest LTurner]

thanks for your input planman.....

now here's another thought.... if employer contributions went in (match in same amount as deferrals) through the year (but not entirely complete, just was done so they wouldn't have a large amount at end of year to contribute), could we conceivably say that the 'ee money actually was there, just went into wrong source those periods in time?

[E as in ERISA]

If that is the position, are you willing to go back and move those contributions to the accounts of the employees who were making deferrals -- and make sure that they got the correct earnings on those amounts -- based on their investment choices. And explain to the other employees why matching contributions and earnings are being taken out of their accounts..... Etc., etc.

[VTPension]

I wonder if any one out there is using any sort of minimum amount to report or not report. For example, we have a client who was late on one $1300 deposit during the plan year - all others were one time. The $1300 deposit was 5 days late - at 8% interest, the additional deposit is $1.42 and the 15% excise tax is $0.21. It is now costing the sponser mor to fix the problem than the problem itself. Is there any guidance out there for this?

[Guest lindamichals]

Our firm went through this recently also. The IRS sent my client a bulletin(No. 2002-50) Table of Interest Rates - Noncorporate overpayments and underpayments. The rates are quarterly and vary each quarter.

Linda

[Guest DeePA]

We've had this happen and are now going thru DOL audit for a client.

The client was late and did mark the amount of deferrals that were late on the Form 5500.

Client also indicated that a prohibited trans. occurred.

The client also did a 5330 and deposited missed income into the plan (interest rate was based on greater of plan rate or 6621 rate (i think i have the right table).

So far audit is going okay and we are happy that client agreed to correct according to our approach.

Hope this helps!

[VTPension]

I'm comfrtable with the process of making the corrections, I'm just curious if you are all reporting EACH AND EVERY LITTLE LATE DEPOSIT, even if the amounts involved are tiny - for instance, less than $10 in interest penalties.