Remedy for late/missing AFN

[John314]

We recently took over a single employer client from a prior actuary and found out that they have not provided the Annual Funding Notice for the past three years. This exposes them to a sizable penalty ($110 per day, per participant). Is anyone aware of a correction procedure or method to remedy this situation? Also, aside from DOL/IRS/PBGC audit is there any way that this requirement is enforced? As always, any cites are appreciated.

[Mike Preston]

Can't be remedied.  Issue them ASAP.  You can start crafting a mea culpa now, or wait until somebody or some thing turns on the heat.

[Larry Starr]

I would just add to MIke's post (which is absolutely correct, OF COURSE!) that no one I know has ever seen any enforcement on this issue. While we provide the funding notice and tell the client to distribute, we actually never know if that was done, nor do we ask. There is a copy in the file and it is our file that is used for any audit. I, as an Enrolled Agent can take a full power of attorney on any IRS audit (DOL seems to accept them as well for that rare DOL audit, and the DOL apparently does not care about funding notices at all) so I am in control of the audit and the client is almost never even seen (occasionally an IRS agent will visit the client, but they are prohibited from talking to the client because of my POA) .  So, when our file is reviewed, in our office where the audit is held, there are the funding notices right in the file and that is never an issue.

FWIW.

[Peter Gulia]

Larry Starr, does the Employee Benefits Security Administration rely on your IRS Form 2848, or does the Labor department ask you to furnish some other power-of-attorney document?