Amend Form 5500 for Retroactive Fidelity Bond?

[M Gerald]

A client established a 401(k) plan as of January 1, 2020, for which it never obtained a fidelity bond. The plan administrator filed Forms 5500-SF 2020-2022 and 5500s for 2023 and 2024, and correctly check the "No" box for the question of whether during the plan year the plan was covered by a fidelity bond.  The client recently obtained current and retroactive fidelity bonds for all years going back to 2020, and the question is, can, or should, the plan administrator file amended 5500s for plan years 2020-2024 to show that the plan was covered by a fidelity bond?

Thanks for your time!

[Connor]

I would tend to say that's not necessary.  I've had IRS audits for clients where they checked the 'No' box and never got a bond, where the auditor simply says "...and tell them to get a bond".  Your situation is even better because you can tell the agent that a bond was obtained and the year in question is retroactively covered.  We can usually get the agent to tell us why a certain plan was selected for audit and my experience has been that it was never because of a lack of a bond.

[Belgarath]

I agree. We've also had DOL audits (excuse me, "investigations" - we had a DOL "auditor" get snippy when we referred to her as an "auditor" rather than an "investigator") where the response was identical - "get a bond" - and no penalty was imposed.

[M Gerald]

@Connor and @Belgarath, thank you both!

[SSRRS]

And what if took RMD, properly showed it as income on annual return, and paid the taxes, however, forgot to put it on the 5500SF. 

1. Should the 5500 SF be amended to show the RMD on the benefits paid line?

2. What is the ramification if forgot to list om the 5500SF a RMD THAT was taken or a rollover from the pension plan to an IRA?  Thank you!

[Cherry Park Advisory]

I generally wouldn’t amend the Forms 5500 solely because a retroactive bond was later obtained. The original filings accurately reflected the facts for those plan years—that the plan was not covered by a fidelity bond at the time. While obtaining retroactive coverage is a prudent corrective action and may protect against prior losses, it doesn’t necessarily change the historical fact that the plan lacked the required ERISA bond during those years. I’d document the corrective action and retain the retroactive bond documentation in case of a DOL inquiry, but absent other errors on the return, I don’t see a compelling reason to amend the 5500s.