Past 5500 filings

I have just be hired by an employer that has not filed Form 5500 for many years.  The employer can only find records for 10 years  They are missing records for more than 10 years. Will the missing years be a problem if they go though the DOL's Delinquent Filer Program.  Will the relief only apply for the filed years?  Will the employer be subject to full penalties  for the years they cannot file?

Larry Grudzien

My understanding is there is no statute of limitations for non-filers.  Also, you will need to navigate the IRS and DOL rules separately since the IRS commonly defers to plans who use the DOL DFVCP program, the IRS is not required to do so and can impose its own penalties and required corrections.

DO NOT ATTEMPT TO CORRECT THIS WITHOUT INVOLVING LEGAL COUNSEL WITH EXPERIENCE IN WORKING WITH BOTH THE DOL AND THE IRS.

Since the data are not available, any correction will require negotiating with each agency, and this is more an art than it is a step-by-step procedure.  A starting point will be confirming the years for which 5500s were required.  This itself can be tricky for 403(b) plans when looking going back at many years past.

May you be well-compensated for the journey you are about to undertake.

Good luck!

I am surprised that they were never contacted for missing 5500 forms in the past by the IRS or DoL unless they never filed in the first place.

I agree with Paul that a legal counsel would be a wise a step especially where no records are available.

Got to catch this before either IRS or DoL wakes up and asks for prior filings.

In preparing QDROs it is typical for the parties or the court to value a defined contribution plan account as of a "Valuation Date".  It might be the date the parties separated, the date the signed their Marital Settlement Agreement, the date of entry of the Judgment of Absolute Divorce, or some other mutually agreed upon date.

The amount in the account as of the Valuation Date will commonly be adjusted for gains, losses and investment experience from the Valuation Date to the date the alternate payee's share is transferred to him/her.  Such a transfers might be: (i) when the Alternate Payee's share is segregated into a separate account for his/her benefit; or, (ii) when the Alternate Payee's share is rolled over to the Alternate Payee's IRA or other eligible retirement account; or (iii) when the Alternate Payee takes a taxable distribution from all or a part of the balance to which he/she is entitled.    

The moment that the in-house Plan Administrator hires or changes a Third Party Administrator ("TPA") the TPA will no longer have access to any records that predate the TPA's involvement and will no longer be able to compute gains, losses and investment experience retroactively. 

The situation is the same if the Form 5500s were never filed and if the Plan Administrator does not have the records necessary to prepare them at this late date. 

The answers to most of your questions are online. 

David  

In a terrible accident at a railroad crossing, a train smashed into a car and pushed it nearly four hundred yards down the track. Though no one was killed, the driver of the car was injured and took the train company to court.

At the trial, the engineer insisted that he had given the driver ample warning by waving his lantern back and forth for nearly a minute. He even stood and convincingly demonstrated how he'd done it. The jury believed his story, and the suit against the train company was decided in it's favor and against the driver of the car. 

"Congratulations," the lawyer for the train company said to the engineer when it was over. "You did superbly under cross-examination."

"Thanks," he said, "but the other attorney sure had me worried."

 "How's that?" the lawyer asked.

"I was afraid he was going to ask if the lantern was lit!"