Correction of late 401(k) deposits after the VFC program

[buckaroo]

I have a client with a 401(k) Plan. In 2001, the client failed to transmit the contributions in a timely fashion. To correct this problem, they utilized the VFC program. (They deposited the missing interest into the participant’s accounts, filed Form 5330, sent out the required notice, etc.) Now, for 2002, they have again failed to transmit the contributions in a timely fashion. According to the information I have read, they cannot use the VFC program because (1) they used it last year and (2) some of the deposits were not made until after the 180 day deadline. Can anyone confirm that the Plan cannot use the VFC program? If that is correct, what is next step/correction method used to fix this situation? Any help would be greatly appreciated.