OK to File a 5500 under DFVCP with missing plan information?

[Guest El Guapo]

My firm was recently retained to make a number of filings under the DFVCP for a new client. They should have filed various benefits (including health, dental, LTD, etc.) over the past 10+ years, but did not. We have been unable to obtain the required 5500 information to make complete DFVCP filings for some of the prior years. For example, for the health plan, the insurance company was able to provide the Schedule A information as far back as 2005, but not for years 2002-2004 (and it does appear that the client was required to file for those years).

For those years (and other years in which we are unable to obtain all of the 5500 information), what's the best course of action? I would think that it is best to go ahead and file and indicate in a cover letter or otherwise that certain information could not be obtained, but haven't seen any guidance on the topic. Any thoughts?

thanks in advance.

[401 Chaos]

El,

Was curious if you found an answer to your question. We have a similar situation as well. My general thinking has always been along the same lines as yours--that if a plan sponsor has exhausted their ability to obtain exact information that it is generally best to file returns for the years they think are missing with general estimates and note that in the cover letter. For returns that are 10 years old, etc. it's hard to think that anybody would care about the exact number of participants or other data at this stage--i.e., does it really matter whether there were 119 or 129 participants in the plan in 2001, etc.? Unfortunately, I don't have any recent experience with this however or heard the DOL (or IRS) opine on this in recent years.

Would appreciate hearing from others with recent experience under the DFVC.

[Guest Quicksilver]

That was the advise given by the DOL, just do the best you can with the available data. They just want to check off that a form has been filed

[Guest KennyH]

It sounds like it is standard practice for you to just file for all the missing years, regardless of how far back? Obviously the most conservative approach is to go ahead and file for all years, but is there some cutoff where we "know" the DOL isn't going to audit any farther back so no need to file for years prior to that?

What if a plan has never filed for their H&W plan for the past 30 years, but probably should have?

[SLuskin]

I called the DOL about this 2 weeks ago. They told me that as long as we have the last 3 years complete, just do the best we can with everything else. I had an ERISA attorney tell me the same thing.

[Guest KennyH]

So what happens if I file for the last 3 years and nothing else?

[chc93]

So what happens if I file for the last 3 years and nothing else?

We had the same situation once. The DOL said that the most recent 3 years should be "accurate". Older years should be at least a "best guess" estimate, if cannot be "accurate", which is what we did. No problems after that.

As posted above, if you don't file years older than 3, the DOL will probably still say that these forms are missing. So probably better to file all years with a cover letter. The DOL apparently wants all forms filed, one way or another.

[401 Chaos]

Afraid I don't have an answer to the specific questions but agree with the most recent advice. I think you probably do need to file some sort of return for prior years going at least as far back as the plan(s) first had 100 participants and so required to file a 5500 (assuming it is not some other sort of funded arrangement, etc. required to file no matter what size). If you file the last three years and the plan had more than 100 participants at the beginning of the earliest year, etc., I think the DOL could flag or ask questions. Factor into the analysis that (1) the DOL has apparently said, at least informally, to "do the best you can" and so may not be inclined to investigate or look closely at some of these earlier returns, (2) the DFVC penalties generally cap out after a couple of years returns due, and (3) the preparation of estimated returns for a H&W should not be all that hard and my advice would be to file as many as you can or need to. I have not had to do that back as far as 30 years--were the H&W 5500 requirements the same that far back?--but have had to go back 11 years. We had reasonably good participant and premium info for the last 6 or so years but gaps before that. Fortunately the plan had not changed insurers much so we did general estimates based on what we knew about size of company / payroll and general premium amounts and noted as much in the cover letter. We just filed that fairly recently so wish us luck . . . .

[TPApril]

Has anyone come up with a farthest filing date to file for a company that has been around all this time, has never filed 5500 and wants to file as far back as necessary? 1980? 1990?

[Flyboyjohn]

My understanding (without any supporting authority) is that you don't have to go back farther than 1999(if I'm recalling correctly that that's the year filing transferred from IRS to DOL).

I agree with the statements that DOL only wants to see 3 "perfect" returns and the rest can be "estimates" (which means in the case of welfare plans almost nothing on the imperfect returns)