Form 5330

For a plan year ended 12/31/2017, an auditor determines that, during 2017, there were multiple failures to timely remit participant deferrals and loan repayments to the trust. The TPA does not agree with this assessment, as the plan became a large plan on 1/1/2017 and the employer was following the small plan safe harbor (7 business days) in remitting contributions. Even using this guideline, the auditor found multiple violations of the 7 day window.

The TPA now realizes that they must file a Form 5330 regarding the IRC Section 4975 excise tax; however, no extension was filed, and they are concerned about possible Penalites and Interest for a late filing of the return. Does the TPA have any possibilities of filing the extension now, providing a "reasonable cause" for not filing the extension, and see what the IRS does? I have never had this particular circumstance come up before and was wondering if anybody had experience with this scenario.

Thanks for any replies.

1 hour ago, bzorc said:

TPA does not agree with this assessment, as the plan became a large plan on 1/1/2017 and the employer was following the small plan safe harbor (7 business days) in remitting contributions. Even using this guideline, the auditor found multiple violations of the 7 day window.

This doesn't doesn't really make sense.  The 7 business day safe harbor clearly does not apply at all for a plan with more than 100 participants, so why is this even part of the discussion if the plan was a large plan on 1/1/17?

1 hour ago, bzorc said:

however, no extension was filed, and they are concerned about possible Penalites and Interest for a late filing of the return. Does the TPA have any possibilities of filing the extension now, providing a "reasonable cause" for not filing the extension, and see what the IRS does? I have never had this particular circumstance come up before and was wondering if anybody had experience with this scenario.

Just correct it.  I have never seen the DOL or IRS follow up with additional penalties and interest for a late correction that was initiated by the plan sponsor.  

Also, don't forget the VFCP or you may get a love letter from the DOL.