DFVCP filings - multiple years, not all of them ready to file

[ldr]

Hi to all,

We have a client who has not provided sufficient data to enable us to produce an annual report or a 5500 since 2014.  Please don't go into the fact that we should have fired the client long ago.  There are extenuating circumstances.

The bottom line is that they have seen the light and have begun to provide data.  We are now in a position to provide them with a 5500 to file for 2015 and 2016. Since they are not under examination at this time, we can use the DFVCP program.  From their instructions it would appear that we are supposed to file all delinquent years at one time.  However, we are nowhere near being ready with 2017's form and may not be for several months.

What are your thoughts on waiting a few months and doing them all at one time versus filing what we do have and doing another submission later on?  What if they do get a letter saying they are under examination in the interim while we are waiting to get the 2017 form done?  

Your ideas are appreciated, as always.

 

 

[ldr]

Update to this request:  I am often the victim of drive-by research inquiries and more details become available as it unfolds.

This client is now ready to file the 2014 and 2015 5500.  The census data isn't even in and reconciled for 2016 and 2017 and it could be many months, not just a few months, before those two forms are ready.

it seems to me that it would be worth it to file the 2014 and 2015 forms, pay the $4,000, and then do it again in a year or so or whenever the 2016 and 2017 5500s are ready to file.  But I would still like to hear your thoughts/experiences on this.

 

[Bob the Swimmer]

I’m in the camp (after 43 years of consulting) of file all of them at once. When you show up with 2 years it’s a dead giveaway that you don’t yet have years 16 and 17 and experience has told me it works better (despite the interim risk you mention) to arrive with all of your ducks in a row.

[Bug on my window]

I think you should try to file what you have now, now.

Can we hear more about this, "do it again in a year or so or whenever the 2016 and 2017 5500s are ready to file"? If it's going to be such a long time, then it sounds like the 2016/2017 forms are not being worked on with all expediency....do you know what's causing the hold up?

I understand Bob the Swimmer's position - however I also understand that filing some years (but not others) under the DFVCP doesn't automatically garner you attention for an audit - otherwise, what's the point of the correction program? If it was just used to catch people, then that would discourage people from using it. Based on how the DOL talks about the DFVCP, it seems to me that they would prefer everyone would simply correct themselves as soon as possible rather than file incorrectly (and in this case, correct what you can, work on the others when you can).

[ldr]

Hi Bug on my window and Bob the Swimmer,

I do appreciate both your observations even if they don't agree with each other!  Bug, it's a delicate situation.  I can't get real specific other than to say that the client is a group of people who are considered to have been historically maltreated and at a great disadvantage in society at large.  They have no sense of urgency whatsoever and normally cannot be prodded into developing one.  To have them as a client is to accept that they will do whatever they will do in their own good time and there's nothing more to be done about it.

I have even been looking to see if there are loopholes that might get them out of trouble altogether just for the nature of who they are, but we aren't that lucky.  They are not a 501(c)(3).  They are not governmental.  They have commercial elements in their participant population that make them subject to ERISA.  The problem is that ERISA means nothing to them and they have not cared to do anything "on time" , until recently when a new advisor became involved.

Now they have become interested enough to at least allow us to finish up 2014 and 2015.  We just cannot predict how soon 2016 and 2017 will be resolved.  So we are debating just what you two are debating - file 2 now and 2 when we can, or wait and do all 4 at one time?

[Kevin C]

I would have the client decide.  There is risk either way.  Guess who they will blame if there is a problem?

We had a non-profit client like that years ago.  We fired them as a client and I sent them a lengthy letter outlining what they needed to do going forward.  The executive director did nothing.  A few years later, I got a call from a DOL Investigator.  The board had fired the director.  Both the Board and the new director claimed to have no knowledge of and no records for the plan.  The ex-director filed a complaint with the DOL because they refused to pay her benefits and told them we had the plan records.   The last I heard, the DOL was pursuing sanctions against the ex-director and those currently in charge of the non-profit.

 

 

[ldr]

Thanks, Kevin C!  Words of wisdom....let the client decide.

[BG5150]

Is this a client that really needs to be YOUR client?

Sounds like more trouble than they are worth.

[ldr]

BG5150..it's not my decision to make.  "Ours is not to reason why, ours is but to do or die!" Of course your idea has been going through my mind as well.....

 

[thepensionmaven]

Agree with Bob the Swimmer.