I have a situation where an employer failed to deposit the deferrals for their retirement plan within the maximum time limit (often 2-3 months late... and EVERY deposit was late). I checked Yes to box 4a on Schedule I but now am unsure how to proceed. I have not had this problem come up before and want to make sure I complete all forms necessary.
As a TPA, is it my responsibility to complete a form 5330 or is that a form for an accountant to complete?
Is there anything else I need to do? I am working on the employer to get the deposits done and am looking into the VFCP program but this employer seems to think he will never get caught! (Yikes)
Any insight/advice is greatly appreciated.
Rachel
Full Version: Failure to deposit deferrals on time
look at the article on
http://www.erisaexpertise.com/articles.asp?id=38
I would do the form as the cpa may not have all of the info needed.
Secondly, I would fix the prohibited transaction problem by going to the DOL. If your client feels that he wont get caught, write a letter informing him of the prohibited transaction. And you feel he should go to the DOL's correction program. Your letter should also include a hold harmless clause if he chooses not to correct.
You can lead the horse to water but you can't make it drink.
http://www.erisaexpertise.com/articles.asp?id=38
I would do the form as the cpa may not have all of the info needed.
Secondly, I would fix the prohibited transaction problem by going to the DOL. If your client feels that he wont get caught, write a letter informing him of the prohibited transaction. And you feel he should go to the DOL's correction program. Your letter should also include a hold harmless clause if he chooses not to correct.
You can lead the horse to water but you can't make it drink.
Please note that the DOL will contact you about going into the Voluntary Compliance Program based to your answer on the 5500. I have a client who is habitually late, I have reported the late contributions on the 5500 for the last couple of years, and the DOL provided an "invitation" letter to go through Voluntary Compliance.
Just to add that late deposits of ee deferrals are considered a "nonexempt" transaction which should be reported on Schedule G to the Form 5500, as well as the Form 5330. Since the client is consistently late, I agree with the prior statement to "CYA"(Cover your assets 
), from a TPA liability standpoint, by writing the client a letter to inform him of the fiduciary issue and suggested method for correction (VFCP). You may waant to let your client know that by going through the VFCP they would insulate themselves, as fiduciaries, from any DOL civil penalties or future DOL examination. I agree that ministerial TPA's need to just inform the client of the problem and may suggest a solution for correction, but it is ultimately up to the client to follow through with doing it.
), from a TPA liability standpoint, by writing the client a letter to inform him of the fiduciary issue and suggested method for correction (VFCP). You may waant to let your client know that by going through the VFCP they would insulate themselves, as fiduciaries, from any DOL civil penalties or future DOL examination. I agree that ministerial TPA's need to just inform the client of the problem and may suggest a solution for correction, but it is ultimately up to the client to follow through with doing it.
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