5558 for plan to be filing DFVC

[TPApril]

Plan Sponsor of HW plan has never filed 5500 and is preparing all past years with intention to submit to DFVC. They have asked that 5558 not be filed for most recent year because it could trigger an alert to the IRS that they are not filing and they could be penalized. Both their broker and CPA have advised them this. 

I'm just curious if anyone has ever seen this happen (ie, is there any connection between the dept. that receives the paper 5558's and the audit departments?), and if so, within what time period?

Because there are many years, it would not reduce the DFVC penalty, but I like the idea of having one less year be late.

[Mike Preston]

I would go even further.  If the DFVCP filing is fileable (sp?) before the non-5558 due date (could be the tax return due date if the plan year and fiscal year coincide) I would recommend not filing the 5500 on time and include it in the DFVCP filing. Who would want to trigger a notice from IRS (whether that trigger is a 5558 *or* a current year filing).

[RatherBeGolfing]

I agree with Mike.  Filing the 5558 should not  trigger them to ask for the 5500, but why take the chance? Likewise, why file the current year before you are ready to submit your past years if there is even a chance that they will ask for the past years before you are ready to submit them?

It isn't going to cost more to include the current year in your DFVC filing, just submit them all at the same time.  

 

[TPApril]

Thanks!  All that being said, have you seen in practice a 5558 trigger an audit, and if so, within just a couple months of filing the 5558?

[RatherBeGolfing]

14 hours ago, TPApril said:

Thanks!  All that being said, have you seen in practice a 5558 trigger an audit, and if so, within just a couple months of filing the 5558?

No I haven't seen it in practice, and there really is no reason for a 5558 filing to trigger an audit.  A 5500 filing that indicates that the plan should have had past filings will probably trigger a response asking why prior years were not filed. 

I see no benefit in filing anything for the current year until you have the past years ready to file (or already filed) with the proper correction.