Late 401(k) Contributions

[nancy]

We have a client that had late deposits in 2003. This was reported on the 5500 and the appropriate 5330 filed and excise taxes paid. They have now received a letter from the DOL suggesting that they should submit an application under VFCP. Anyone else seen this happen? What might be the consequences of not filing under VFCP? Audit?

[Ron Snyder]

I wonder if I could ignore what the traffic cop says to me and not get arrested.

[austin3515]

You're kidding! I wonder if this is more that they are trying to encourage people to use the program, because no one uses the VOLUNTARY program. Was there anything unusual about the filing? Was it several PT's for a large amount of money?

I agree that it's tough to turn down the "suggestion" unless the letter makes it clear that it won't impact the audit selection process.

[nancy]

The total late contributions were about $20,000. The excise tax paid was less than $50. The only situation bothers me. It does appear that we are going to be forced to file under VFCP. I just wondered if others were getting these letters.

[Guest Ashlea]

I heard that many plans that marked that on their 5500 are getting these letters. At a SunGard Corbel meeting - they suggested that if you corrected the problem, you were better off NOT filing VFCP. - If it has been corrected.

[Guest xab]

I recently had a client who received such a letter - but who had NOT marked box 4a on their Form 5500 (the box that indicates that a late contribution was made).

Pretty frustrating when you get a letter generated in error that demands that you respond to them if you don't use the VFCP program that doesn't even apply!

[Guest lindamichals]

Our client chose not to take advantage of the VFCP as the amounts were minimal, therefore, was requested to provide the following for each untimely transmittal and he recieved a release letter from EBSA, no further action was taken.

1) the date of withholding/receipt

2) the amount withheld/received

3) the date by which transmittal should have occurred

4) the date of actual transmittal

5) the amount actually transmitted

We also called EBSA in regards to how the Schedule I or H should be answered IF the plan sponsor entered into VFCP and received a release letter. The response was to answer the question YES and provide amount, but also attach a copy of the release letter.