ER say no late deferrals but there were--TPA responsibility?

[BG5150]

What is the TPA's responsibility when a client indicates in the TPA's year-end paperwork that there were no late deposits of deferrals (and/or loan payments), but upon review, the 12/30/16 payroll was not deposited until the beginning of April?

We are preparing the 5500 for the ER to sign. 

What is our exposure if we do not indicate late deposits because we are filling out those questions per the client's direction?

[PFranckowiak]

I would have a discussion with them on the phone. TPA responsibility is to educate the client on the rules and penalties for not following the rules.   That way I can see what their attitude is toward it.  I would have a chance to explain the rules to them and why the contribution is late. Email just doesn't work to explain it as you cannot tell if they really understand.

1.  Ball Park the interest and penalty and your fees and let them know it's less expensive than being caught in an audit with late contributions.  They also are signing the 5500, knowing it's incorrect. 

2.  Make them sign something that you have notified them that the correct answer on the 5500 is late.  You will mark the box not late per their instructions, but that you will take no liability for it nor or in the future.  

Not sure I would want to keep a client that would not listen to me.

[MoJo]

I would also let them know that the DOL accepts "anonymous" complaints via their website - and if any disgruntled employee or former employee raises the issue, not only would they be on the hook for the late deposit, but also for filing an inaccurate/incomplete Form 5500 (which is deemed "not timely filed") and the penalties for that.  Upon examination, if the DOL determines that the plan sponsor knowingly filed the inaccurate Form 5500 (and you, as the TPA could be subpoenaed to be "interviewed" where you would have to disclose that you TOLD the plan sponsor about the discrepancy), there may be "fraud" penalties and consequences as well.

I'm with PF - cheaper easier faster better to be truthful and fix it, than to get caught....

[Mike Preston]

Are you sure about the year?  It seems to me that a reasonable position would be that, as of 12/31/2016 the deferrals weren't late. What do you think about treating it as being late in 2017, rather than 2016?

[BG5150]

This was the 12/30/2016 payroll to the penny, and each p/r is different each week.  It was coded at the R/K as 12/30/16 (it would have been an odd mistake if it was really for the 3/29 p/r).  We had sent the client a breakdown of the "receivables" we had calculated, and a week or two later, the contribution is posted.  Am I 100% sure without asking the client, but 99.8% sure given the fact pattern.

[Belgarath]

But getting back to Mike's point, are the deferrals "normally" deposited the same or next day, or is there sometimes a 2 or 3 day timing for the submission of the deferrals? And given that 12/31/16 was a Saturday, again, as Mike suggested, would it be a reasonable position to say that they weren't "late" for 2016? Seems like a reasonable position to me...but then, I'm easy to get along with, regardless of what people say!

[BG5150]

A 12/30 payroll deposited in the first week of APRIL is definitely late.

I think I see what you mean now.  It was due around January 10, so it's a late 2017 contribution.  But we do the forms on an accrual basis.  So, the contribution is already on the 5500.

Same crap, different day, though.  And we'd have to remember to book it on the 2017 forms.  The interest will be the same.  So why not just get it taken care of today.

[BG5150]

My main question is:  if the plan gets audited (or investigated), does the TPA have any exposure when it's quite obvious there was a late deposit and that we prepared the forms with an obvious omission.  I do know the client said in writing (or rather electronically indicated) there were no late deposits, and that the client is signing the 5500.

 

[RatherBeGolfing]

15 minutes ago, BG5150 said:

My main question is:  if the plan gets audited (or investigated), does the TPA have any exposure when it's quite obvious there was a late deposit and that we prepared the forms with an obvious omission.  I do know the client said in writing (or rather electronically indicated) there were no late deposits, and that the client is signing the 5500.

 

If you prepared the form knowing it was false?  I don't see how you can avoid exposure.  If you, the preparer, is also subject to Circular 230, its is a big no no

[RatherBeGolfing]

19 minutes ago, BG5150 said:

A 12/30 payroll deposited in the first week of APRIL is definitely late.

I think I see what you mean now.  It was due around January 10, so it's a late 2017 contribution.  But we do the forms on an accrual basis.  So, the contribution is already on the 5500.

 

FWIW, this is how I look at it too.  If the deferral is a 2016 contribution and it is not timely deposited it goes on the 2016 Form 5500.

 

[BG5150]

Are TPAs subject to circular 230?  I seem to remember in a past job that we were told to remove the Circular 230 disclaimer on our e-mails because it didn't apply.

[RatherBeGolfing]

The TPA as an organization, no.  Me as a practitioner, yes.  The removal of the 230 disclaimer was not because the practitioner was not covered under 230, but rather that the 230 disclaimer was not meant to be a CYA disclaimer on all correspondence, which is why the IRS said to remove it.

If you provide a client with a written opinion on a certain transaction or procedure you still need to make sure that the client understands what we used to have in the disclaimer, they just didn't like the generic disclaimer.

At least this is my understanding of why the IRS forced us to remove it.