Plan Audit: failure to file, now caught

[Guest BWORC]

My client, the plan sponsor, misunderstood the plan audit requirements and did not obtain an audit. The DOL caught them.

We sent a statement of reasonable cause taking some of the blame and laying some on the TPA for failing to inform us that we had gone over the 120 participant limit.

Now the DOL has rejected our statement and demands the $75k. (Let me add that we have still not filed the completed Form 5500 because the auditor cannot get the records it needs to finish the audit. My client cannot find them and the former TPAs are not particularly responsive. Penalties continue to accrue.)

My question is this: Is there any point in appealing this decision to the Office of Administrative Law Judges?

I have no experience with this process.

I understand the plan sponsor's obligation to know the rules and the reporting requirements, but I am very sympathetic to the argument that the TPA, which knows the rules and how many participants the plan has, should do a better job of alerting its clients when the audit requirement is first triggered. I know that in the boilerplate sent to clients, notice on the audit is provided, but that seems woefully inadequate to me, given the penalties that accrue from the failure to file the audit.

Any help would be greatly appreciated.

[Guest Sieve]

Appeal. Once the formalities of the commencement of the appeal process have been dispensed with, they will be willing to settle for a fraction of what you owe and you can then decide whether it is worthwhile going any further with the appeal.

[Guest Sieve]

Of course, the DOL won't talk settlement until the audit is filed. That's first on the to-do list.