When the 5500s are due and audits have to be completed, there is always an issue regarding late deferrals when the employer failed to remit these contributions as soon as possible.
As of right now, late deferrals are my most popular error to fix for clients. It’s not surprising as plan sponsors who make the mistake of late deferral deposits do it again and again. Any plan that has late deferrals have to self-correct their issue and make any earnings adjustments, based on how long it took to correct their error. While many auditors say that all a plan sponsor does is to self-correct, I disagree. I believe that any plan that has to self-correct, should also apply to the Department of Labor (DOL) Voluntary Fiduciary Compliance Program (VFCP). Why do I suggest that? Well, I’ve had clients who admitted that they made late deferrals and received correspondence from the DOL, noting that they don’t have a VFCP application from that particular plan sponsor. It’s a strong suggestion from the DOL that a VFCP application should have been filed. So that’s why I suggest that plan sponsors file a VFCP application because I don’t like correspondence from the DOL and it’s my concern that the lack of a VFCP application could make the plan sponsor a target for a DOL audit.
All plans with late deferrals need to self-correct, but I suggest a DOL VFCP filing (there is no user fee and the flat fee costs I charge won’t be that expensive).