Wrong Form 5500

A small employer 401(k) plan that allows for employer securities as an investment option has been filing a Form 5500-SF instead of a Form 5500 with a Schedule I.  Should they amend the prior year filings? If so, should they go through the voluntary compliance program?

The VCP is an IRS program for tax qualification issues.  Your problem is essentially a missing or incomplete 5500--it is a reporting issue.  I would be concerned that the DOL might assert that failing to file the correct 5500 (and Schedule I) is tantamount to an incomplete filing and that late penalties can be assessed on all the years that the incorrect 5500 was used and not corrected.  That could be very expensive.  I think the best, safest route here would be to refile on the correct 5500 for all affected years and make a DFVCP submission (this is a DOL program for late 5500 filings).  This would, of course, restart the limitations period for review by the DOL and IRS on these years, but if the argument is made that the prior filings were insufficient, then the limitation period on those filings has (arguably) not started running anyway. 

Of course, this is just my humble opinion and you must do your own research and reach your own conclusions.  Hope this helps.

JD

It seems to me the forms were filed timely so there is no need to file VCP (IRS Correction program (which is not appropriate here) nor file DFVCP (DoL 5500 correction program for late filings). Rather amended returns can be filed for all affected plan years.