Form 5330

[jpod]

A plan had a single late deposit of $250 (due to an off-cycle paycheck to a terminated employee). Is there IRS authority saying that there is no need to file the 5330 or pay the excise tax if the tax is less than $1.00?

[D Lewis]

See this Link for a prior discussion: http://benefitslink.com/boards/index.php/topic/48332-late-deposits/#entry211802

The guidance is informal and never been confirmed that I know of, but we give the amount of the excise tax to the participants as extra lost earnings if the amount is small. Just don't ask me what small or de minimis is.

The second part of the issue is the DOL. My understanding is that if a sponsor receives a letter from the DOL about late deposits (usually triggered by the question on the 5500), and if the sponsor has corrected the late deposits AND has paid the excise tax, the sponsor can get a letter of no action from the DOL without filing under VFCP.

So if we do what the IRS informally said is ok, and give the excise tax amount to the participants, is that good enough for the DOL to get the no action letter, or do we now have to file under VFCP?

I've talked to the DOL and sent them requested e mails on the topic. I don't think they know as they never got back to me except to say "that's a fascinating question".

[Below Ground]

My experience has been (1) late contributions corrected, (2) 5330 filed and tax paid, (3) 5500 filed with listed late contribution, (4) DOL sends letter about late contributions => they still want VFCP Filing. I have faced this issue at least 5 times with tax amounts under $50.