Late Deposit of 401(k) Deferrals

[MarZDoates]

Does anyone have experience filing through the VFC Program? I've read through March 28, 2002 Federal Register to determine how to file. I've also read something published by Corbel indicating that if the employer self-corrects using the VFCP methodology and foot notes this on Form 5500, Schedule I, that should be enough to satisfy DOL. I would appreciate hearing some opinions on whether just to "self correct" or file the full blown application. Thanks.

[Guest cease]

Please see that I am asking the same question in the Correct Plan Defects Section. Check to see if anyone responds to this post.

[alanm]

The answer is in Rev Proc. 2003-44

[Guest cease]

Since I am interested in feedback related this topic as well, I have been watching the replies to this topic. alanm makes reference to Rev Proc. 2003-44, which describes the VCP not VFCP. I reread this procedure and did not see any reference made to the VFCP. Other than the information out on the DOL website, has anything else been published about the VFCP?

[goldtpa]

Do a search on the message boards for VFCP.

[E as in ERISA]

It is my understanding that there is not a significant advantage to actually doing the filing if you believe that you have fully corrected the late deposit -- following the method outlined in the VFCP. If the DOL later audits you and find some additional amounts that need to be corrected, it will NOT go back and assess penalties on the other amounts that you have corrected. The penalties apply only to the incremental amount.

If you had filed, you would have been protected against such penalties. But there is time and expense in preparing a filing, so it may be better to take your chances at audit roulette. Especially if you believe that you have fully corrected.

[Guest Admin]

How about this example, I borrow $1,000.00 from my 401(K), I never even spend it. It sits around doing nothing productive. I pay back $210.00 a month for 5 months via check(1000.00 principle + 50.00 interest). I only had to come up with the 50.00 from already taxed cash. 1000.00 was never taxed going into my 401k, it was taking out tax free via my loan and the same 1000.00 was sent directly back in five payments, IRS never touched it. Never taxed. End of example.