Correcting Sch I Item 3e-f

[Guest SuzieQNEC]

A prior recordkeeper of a profit sharing plan recorded on Schedule I the eoy balance of participant loans incorrectly under 'Loans (other than to participants)' instead of under 'Participant loans' for up to 8 years going back (1999-2006). Because the plan is terminating and they are filing a form 5310, the administrator would like to correct all plan years for this item. Is there a fee for each plan year that is amended? I'm not sure how to approach this. Thanks.

[SheilaD]

A prior recordkeeper of a profit sharing plan recorded on Schedule I the eoy balance of participant loans incorrectly under 'Loans (other than to participants)' instead of under 'Participant loans' for up to 8 years going back (1999-2006). Because the plan is terminating and they are filing a form 5310, the administrator would like to correct all plan years for this item. Is there a fee for each plan year that is amended? I'm not sure how to approach this. Thanks.

As far as I know there is no IRS or DOL fee for filing an amended returns. Your own fee is up to you

Sheila

[Bird]

A prior recordkeeper of a profit sharing plan recorded on Schedule I the eoy balance of participant loans incorrectly under 'Loans (other than to participants)' instead of under 'Participant loans' for up to 8 years going back (1999-2006). Because the plan is terminating and they are filing a form 5310, the administrator would like to correct all plan years for this item. Is there a fee for each plan year that is amended? I'm not sure how to approach this. Thanks.

Here are some thoughts and questions:

By "recordkeeper" I assume you mean third party administrator, or maybe accountant filling out the 5500. And by "administrator" I assume you mean "new" (third party) administrator or other person now filling out the 5500s. That would appear to the person to ask if there is a fee, no?

As I see it, IF there are any red flags on the Schedule I (and having seen some crazy stuff, and yes, having made some mistakes myself, I have to wonder if there really ARE any red flags), then having non-participant loans would be a bigger flag than participant loans. And if a 1999 filing hasn't created a problem by now, I see no reason at all to go back and correct it. In fact, I'd say it's flat-out stupid to suggest that it's necessary to correct a 1999 Schedule I filing for such an error. (Either that or someone is trying to generate revenue.) If I were taking over this plan, I might want to correct a year or two in the past, but for the most part, I'd be content to just start doing it right. And I don't see that the 5310 filing has much to do with it; I'm always amused by the thought that the government is cross-checking multiple databases and looking for inconsistencies. Hah! What's the first thing they ask for when a return is audited? Copies of everything that you already gave them in one form or another.

If people don't have enough to do they can dig a hole and then fill it back in instead of correcting 1999 5500 filings. Sheesh. Life's too short.

[Guest SuzieQNEC]

Thank you for the replies. I'm sorry I was not clear on roles regarding this. The client is the one who is requesting to go back and fix every year. We, the consultants who are filling out the 5500's for them and now do the recordkeeping for the plan are trying to save them money and have suggested that although there is a risk of this being flagged, that risk is small and it is not worth the cost right now. We are trying to keep their expenses down. The client does not want to leave any possibility open of anything coming back to haunt them. I believe the client will not want to do just a few years back but all years back. One of the things I'm unclear is if there is a fee associated with submitting an amended plan going back that far but if it's only our fee involved that's a relief.

[K2retire]

Why not compromise and amend only those years still open for audit?

[R. Butler]

The DOL won't charge. I'd do what the client wants & charge accordingly.