penalty for failure to include an audit?

[K2retire]

Client thought a "plan participant" was only someone with a balance and never reported eligible, non-deferring participants to the TPA. The prior TPA never questioned that 100% of the employees were deferring into the 403(b) plan and filed 5500-SFs each year. In fact, there were several hundred eligible employees. We are working with the client to get the audits done to amend the past filings. Although we will be asking for a waiver of the penalty, I'd like to be able to give them an idea of what it might be. I haven't been able to find this detail on the EBSA website.

[ETA Consulting LLC]

Isn't is merely the equivalent of having not filed the return? A regular DFVC filing for all years to include the submission should suffice. Arguably, a corrected filing to a large plan "may" work since the 5500SF was filed timely, but I wouldn't necessarily try to make that argument.

Good Luck!

[chc93]

Also, a 5500 filed without the required independent audit is considered to be "incomplete", even if filed timely without the audit. This was after electronic filing started. This from the EFAST2 FAQ:

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Q25: Will the EFAST2 system still receive my filing if I do not attach the IQPA report with my Form 5500 annual return/report when it is required?

The EFAST2 system will receive your filing, but submitting the annual return/report without the required IQPA report is an incomplete filing, and the incomplete filing may be subject to further review, correspondence, rejection, and assessment of civil penalties. Also, if you do not submit the required IQPA report, you must still correctly answer the IQPA questions on Schedule H, line 3. This means you must leave lines 3a and 3b blank because the IQPA report is not attached and must also leave line 3d blank because the reason the IQPA reports is not attached (i.e., was not completed on time) is not a reason listed in any of the available check boxes. You should still complete line 3c if you can identify the plan’s IQPA. Please note that failing to include the required IQPA report and leaving parts of line 3 blank, however, will result in the system status indicating that there is an error with your filing because, as noted above, submitting your annual return/report without a required IQPA report is an incomplete filing, and the incomplete filing may be subject to further review, correspondence, rejection, and assessment of civil penalties. Thus, if you find it necessary to file a Form 5500 without the required IQPA report, you must correct that error as soon as possible.

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Probably more the equivalent of non-filing rather than filed 5500-SF "on time" without the audit...