Availability of DFVC and IRS Remedial Programs

[Guest boberlander]

A client wishes us to prepare late 5500s for 1996, 1997, 1998, and 1999. There are likely to be qualification issues that the client intends to address.

A IRS notice for the 1998 form has been received. It does not assess a penalty, but indicates that it is the Final Notice before an audit or other sanction.

(1) Is DFVC still available for 1998, since this is an IRS, not DOL notice?

(2) Is DFVC available for years before 1998? The messages on this board seem to indicate "Yes," but the FAQ on the DOL website indicates for 1998 and subsequent years.

(3)Is there a way to indicate we will use DFVC for 1999 (and 1996 & 1997 if available)? We would like to "head-off" any future nonfiling notices, or at least make it known that we intend to file.

(4) The plan most likely will have qualification issues for one or more of the years in question. We do not know the extent of the issues (or if they exist for that matter). Is there a way to indicate to the IRS that we are in the process of reviewing the plan and intend to apply to one of the remedial programs? Here, we'd like NOT to get audited and lose the availability of SVP, VCR and WI CAP.

Any guidance is appreciated.

Thanks.

[Guest Emiliano]

1) DFVC is still available as long as the notice your client received is not related to failure to file Form 5500; if your client has already received notice re: delinquent filing, then it's too late.

2) DFVC is still available for plans prior to 1998; the DOL press release of Feb. 26 only addresses the new filing requirements;

3) Client is fair game for delinquent filing penalties for each year until it actually files under the DFVC program (expression of intent to file under that program is not sufficient);

4) Once again, the DOL/IRS may assess delinquent filing penalties until the client actually files under the DFVC program.

[Alf]

Re: #3 DFVC should still be available for other years that have not been caught by the IRS.

#4 There is no formal way of letting the IRS know that you are going to file under one of the correction programs without actually filing. You can file a determination letter application and highlight all of the issues and ask for consideration under cap or vcr, or you can file a very basic vcr or cap application for the issues and supplement them later. Other than those methods, you are fair game for audit on the compliance issues.

[dmb]

I have a similar issue. i don't have any IRS notices, but I have a Money Purchase Plan with less than 10 participants. The employer hasn't filed any 5500s, the plan is effective 10/1/94 and was not required to file for the plan year ending 9/30/95 (one participant and less than $100,000 assets). He now wants to make amends and go through the DVFC. While reading procedures for filing DVFC it says to file complete Form 5500 or Form 5500-C (but not Form 5500-R) as appropriate. Does that mean the employer must file a 5500-C for each year or does it mean that 5500-R is exempt (I doubt it)???

Thanks.