Late Large filer Form 5500

[cpc0506]

We had what some would consider the perfect storm for a plan of ours.

Client is a large plan (over 120 participants.) Plan year ended 9/30/15.

An employee of our TPA firm had contacted the auditor regarding the audit for the plan on 4/5/16 to see how the audit was going and if it would be ready for 4/30/16. Auditors asked us to put the plan on extension to 7/15/16. Now, here is where the breakdown begins.

The auditor working on the plan was a newbie. She finished the audit and never provided it either to her supervisor or us, the TPA. The employee in our office responsible for the plan and Form 5500 filing terminates employment and has indicated that all plan work is current. Just last week, we are contacted by the client to see why the 9/30/15 Form 5500 was not filed.

So, we are now trying to decide to either:

1. File the PYE 9/30/15 Form 5500 under DFVC Program and pay the penalty; or

2. File the PYE 9/30/15 Form 5500 with a letter of reasonable cause and hope that the letter is accepted and no penalty is assessed.

Has anyone ever filed with a reasonable cause letter and had success since EFAST came along? And If we file late and it is not accepted, can we then amend and file under DFVC Program or is DFVC no longer on the table.

Any guidance you can provide or experiences you have encountered would be greatly appreciated.

[Belgarath]

Remembering that free advice is worth what you pay for it...

Swallow hard, and file under DFVCP program and pay the penalty. No more worry, stress, uncertainty, or unproductive and non-billable time spent.

Others may think I'm crazy, and have an entirely different opinion. Good luck.

[BG5150]

But who is going to pay the penalty, now that's a different matter. Lots of blame to throw around here.

I blame the CPA for not having a process (or following it) to see that all audits get through partner review or otherwise finalized.

I blame the TPA for not having a process (or following it) to see that the 5500, indeed, was filed.

I blame the sponsor/administrator for not having a process (or following it) to see that the 5500, indeed, was filed.

Maybe $500 apiece?

[Belgarath]

Our clients would fire us if we attempted to charge them anything for this. And honestly, I feel like this is why they hire us. Rightly or wrongly, we would just pay the penalty in this situation.

Not trying to be sanctimonious, that's just how we would handle it.

[RatherBeGolfing]

Our clients would fire us if we attempted to charge them anything for this. And honestly, I feel like this is why they hire us. Rightly or wrongly, we would just pay the penalty in this situation.

Not trying to be sanctimonious, that's just how we would handle it.

Yep, this is how it would be handled if it landed on my desk as well. Although, most auditors I work with are very reasonable as well and would probably offer to pay half of it in a situation like this.

[Lou S.]

Our clients would fire us if we attempted to charge them anything for this. And honestly, I feel like this is why they hire us. Rightly or wrongly, we would just pay the penalty in this situation.

Not trying to be sanctimonious, that's just how we would handle it.

Yep, this is how it would be handled if it landed on my desk as well. Although, most auditors I work with are very reasonable as well and would probably offer to pay half of it in a situation like this.

This is probably a good compromise.

[BG5150]

^ true. of all the culpability, i hold the sponsor lowest in this situation