Delinquent Filer Voluntary compliance program

[Chippy]

one of my clients has an insurance policy as part of the plan assets. Back in 1998 when the plan changed recordkeepers, the insurance policy was dropped off of the books. It has now resurfaced and they want to amend the returns to properly reflect it in the assets . The 1998 to 2010 5500's have to be amended.

Would filing through the DFVCP be the correct way to fix this?

[Guest Sieve]

No. I don't think this missing asset is sufficient for the 5500 filings to be deemed incomplete, so filing amended Forms should be sufficient.

Is there a reason you'd prefer DFVCP?--because I'm sure the IRS would not object to receiving new Forms with a user fee attached . . .

[Chippy]

The insurance guy called and told me that was the way to correct it. I have all the amended returns completed and reading over the DFVCP procedures, I thought that it might not apply in this case. I just didn't want to file 12 amended returns and then have EBSA come back and say we should have filed through DFVCP. The value of the policy is so small compared to the total assets of the plan. Do you think filing 12 amended returns will trigger an audit?

[david rigby]

What kind of plan is this? Is it possible that the missing asset caused an incorrect distribution?

If the answer to that question is NO, is it necessary to amend anything? (Just asking; materiality might be relevant.)

At any rate, this Q may be either very simple or very complex. Get thee to an experienced ERISA attorney.

[Guest Sieve]

No way to tell, Chippy--but I just don't see how a change in a response to an item on timely filed Forms 5500 fits under DFVCP. But, as I said, I'm sure the IRS won't quibble when it receives a user fee, even if it might be an unnecessary one.

What do some of you TPAs out there think about this--amendment returns (my vote) or DFVCP?

[TPAMan]

This is a valuation issue not a delinquent filing issue. You may have a number of other compliance concerns depending on the how the insurance policy value was attributed to plan participants, but a delinquent filing issue doesn't appear to be one of them.

[Bird]

Geez, 12 years? I've "found" insurance polices once or twice; some TPAs feel that it is appropriate to exclude them under the the theory that they are guaranteeing benefits (I disagree). We just bring the policy back on the books and show a gain for the one year and move on with our lives.

[movedon]

Geez, 12 years? I've "found" insurance polices once or twice; some TPAs feel that it is appropriate to exclude them under the the theory that they are guaranteeing benefits (I disagree). We just bring the policy back on the books and show a gain for the one year and move on with our lives.

Another vote for this.

[Chippy]

Thank you all. My first thought was to add it back into the assets and move on. Just wasn't sure if that was the correct way to fix it. It's only one policy for an active participant. They are going to cash in the policy now and put the proceeds back into the plan.