Very Late Plan Deferral - What to do?

[heygents]

This must be the month of problems for me

Long story short.... A rather large deferral for the owner of a plan sponsor for December 2012 was never deposited in the trust account due to a perfect storm of miscommunication between the payroll company, recordkeeper, and plan sponsor. Deferrals for all other participants were deposited and invested in a timely manner for the month. The deposit still hasn't been made. What is the best course of action to correct this issue? Thanks

[jpod]

I am assuming that there really was a good "deferral," so that it escaped the owner's taxable income for 2012. Here's what I would recommend (absent strange facts which I don't have): 1. Deposit the money. 2. Deposit the earnings calculated per the DOL calculator. 3. File the excise tax returns and pay the excise tax.

[12AX7]

There is no automatic use of the VFCP calculator, unless there is a submission to the DOL. Additional lost earnings may have to be restored in the event of a DOL examination, which would affect the filing and penalty paid with a Form 5330. The difference may be minimal, but worth the extra effort to use plan rates of return as to not having to do this calcuation again in the future. Same is true when calculating the amount involved in the prohibited transaction (Form 5330).