Late deposits - Schedule I attachment 4a - VFCP: Whats required to file?

[Guest chris4013]

Late deposits - what will happen to my client if I put on attachment 4a - corrected outside of VFCP? Is there a 100% correlation between a DOL audit and enterring in that field?

I have a case in conversion where the prior tpa enterred an amount as being deposited late. The DOL sent a packet to the client and told them they can elect to submit to VFCP by May 10. What is likely to happen to the client if they don't submit and write a letter detailing the correction (the alternative listed in the letter)?

How difficult is it to submit an application to the VFCP?

[BeckyMiller]

I have no idea what the DOL's response rate is if you report late contributions and don't file with them for the correction, but I can tell you that I have seen a huge increase in the number of such follow ups. Huge, as in never used to get any follow up when you reported a PT that the client corrected and paid the excise tax. Now, someone sends my such a notice about monthly.

[Guest BJ]

Have you had any experience responding to the DOL offer to participate in VFCP program? Do you have any suggestions how or if an employer should respond to the inquiry?

[Guest chris4013]

I can give an update once I get a no action letter from the DOL. The DOL has placed a lost interest calculator on their website, and their downloadable application seems pretty easy to use. I also wasn't aware that you can avoid an excise tax by disclosing to the participants the late deposit, and the correction method used, avoiding the 5330. You specify that you are chosing not to file the 5330 on the application, and once the IRS asks you where the 5330 is, triggerred by the reporting on the 5500, you would show them the no action letter.

[Archimage]

Can you provide a link for the calculator. I have looked at the DOL website and I am having trouble finding it.

[Guest chris4013]

http://www.askebsa.dol.gov/vfcpcalculator/

[TBob]

The calculator mentioned above seems to work fairly easily but almost seems too easy. Has anyone used it in an actual correction of a late deferral? We generally calculate actual lost earnings based on fund performance and compare to the earnings using the federal rates. We give the participant the best of the two. Do we not need to do this?

Also, the calculator figures the lost earnings well enough but it does not tell you how to allocate it back to the plan. I assume that you would allocate prorata to the participants whose deferrals were late?

Just not warm and fuzzy yet.