I have received conflicting opinions and would like to ask for some clarification related to filing for a Late Remittance of Employee Contributions. Suppose I have contributions withheld in late December 2001 ($10,000) (would be due sometime in January depending on the "administrative ability to segregate") and were not remitted until June 2002. The lost earnings from the January due date until June 2002 are $400.

Question #1

Since the payment was not due until January 2002, am I correct that this would not have been reported as a late remittance on the 2001 Form 5500? The prohibited transaction did not exist until the due date.

Question #2

On Schedule H, Line 4a, would the dollar amount reported be the total contributions ($10,000) or the lost earnings ($400)? Generally, I have heard the answer is the $10,000.

Question #3

On Line 4d (assuming item was not corrected via VFCP), would the amount reported be the $10,000 or the $400? This is where I get conflicting answers. Some indicate these shoud be the same at Line 4a, while others indicate it would be the lost earnings (the actual prohibited transaction). Which is most commonly used?

Question #4

If a Schedule G is prepared, am I correct that the "date" would be the due date (January 2002), not the date of the deferrals? Also, I would imagine the dollar amount would be the $400, which is the dollar amount of the non-exempt transaction (the lost earnings). Since this Schedule should be associated with a Form 5330, and the Form 5330 would definitely have the $400, I would think they should agree.


I have actually heard that in some cases, Line 4a and 4d would have $10,000, but Schedule G would have $400. I am looking for some clarification or references (Form 5500 instructions are a little vague). Any thoughts are appreciated.

Hi,
4a should be $10,000 and 4d should be $400.
Hope this helps!

Is there any literature out there that I can show to the people who have been telling me Line 4d should be $10,000. The ones telling me this are fairly reputable national firms, so I don't know if there is some interpretive guidance. My feeling has always been that 4d is the prohibited transaction of $400, but sometimes using common sense causes errors.