DOL Audit, Form 5330 filing, now EPCRS?

[Gudgergirl]

My client was recently audited by the DOL. The agent discovered various problems including chronic late deposit of salary deferrals and failure to suspend salary deferrals following a hardship distribution. My client made a contribution to the plan for lost earnings (calculated by the DOL agent at the greater of the IRS rate or the plan earnings for the year in question) and revised its policies to ensure the problems would not recur. The DOL issued a letter saying the investigation is concluded and due to the actions taken by my client, the DOL "will take no further action with respect to these matters."

The letter continues to state that because a prohibited transaction occurred, the matter will be referred to the IRS and if client agrees that a prohibited transaction occurred, client should file a Form 5330 with the IRS. Client's TPA is working on this filing.

When I spoke to the DOL agent handling the case I mentioned that I would be preparing a filing under EPCRS to address the operational failures of the Plan and the agent acted surprised that I would do this. Previously she had repeated several times that she would be sending the IRS information regarding these failures so it makes sense to me to file under EPCRS instead of waiting to see if the IRS will audit the plan.

Now I am second guessing myself. I don't want to waste the client's money on an EPCRS filing if it is overkill. The EPCRS fee is $2500 plus there are legal expenses.

Does anyone have any thoughts or advice?