Late deferral penalty for 2020 and 2021

[Jakyasar]

Hi

Not a 401k expert (barely novice).

Looking at a plan for 2020 and 2021.

Both years had deferrals deposited late. No VFCP calculations were made nor any adjustments deposited into participant accounts.

No 5530s filed.

How can this be corrected?

Thanks

[Riley Britton]

You can still correct through VFCP.  Have lost earnings been calculated?  Just a note, you cannot use the VFCP calculator to figure lost earnings unless you are submitting through VFCP. Self-correction is less expensive and less  time consuming but going through VDCP protects the plan sponsor from the DOL possibly taking any enforcement action. 

[Jakyasar]

Riley, tx but how do you deal with the 5330 - excise tax filing?

Follow up question

On completing the 5330, I will possibly need additional pages as all deferrals were late. How do you accomplish this?

This is just crazy for completing this form for pennies.

My motto, no good deed goes unpunished. Grrrrr

[Riley Britton]

9 minutes ago, Jakyasar said:

Riley, tx but how do you deal with the 5330 - excise tax filing?

Follow up question

On completing the 5330, I will possibly need additional pages as all deferrals were late. How do you accomplish this?

This is just crazy for completing this form for pennies.

My motto, no good deed goes unpunished. Grrrrr

 

[Riley Britton]

I believe you can enter one line that basically says Late deposits for multiple pay periods in 2020 or whenever. I am not an expert on this so you may want to wait for someone else to weigh in! 

[Jakyasar]

That is what I am planning to do as well but I will wait a bit more, thanks

[Bri]

I've done it as two pages of a spreadsheet, just label the cells to look like the pages of the actual 5330.  Then fill in the actual 5330 with "see additional pages".

That way, if all 52 weeks were late.....one page for the transactions and one page for the corrections.

[Jakyasar]

All this work for 1.90 of penalty, wow

Dumb question, where do you say "additional pages", I did not see a box for it

[Jakyasar]

I was also checking with someone else and was told that the filing does not allow attachments and need to file a separate 5330, hmmm.

[Bri]

There was no box - I filled that in as text in the usual spot on the form where you'd list the first PT.  I've always had clients mail in the 5330 after they sign it and write their check - if you're filing a 5330 online I haven't seen those procedures.

[Jakyasar]

Mine would be manual filing as well.

What to do, what to do.