Correcting Plan Errors

An incorrect or incomplete action may make the difference in your plan maintaining its tax-favored status or incurring large IRS or DOL imposed penalties. Fortunately, the IRS and DOL have programs available to self- correct plan errors.

In the event of special problems requiring IRS or DOL intervention, we’ll select the appropriate compliance program, prepare the submission package and coordinate the process through correction. If your plan is selected for an IRS or DOL audit, we’ll serve as the primary contact before, during and after the audit until a closing letter is issued.

Examples of plan errors that we have been engaged to correct include:

  • Plan documents that have not been amended or not timely amended for recent tax law changes
  • Plan documents that contain operational defects
  • Delinquent Form 5500 Return Filers
  • Late 401k Deposits to the Plan
  • Uncorrected failed discrimination testing (such as 401k, top heavy)

Client Issue
A company with over 200 employees recently changed its outside CPA firm. The CPA discovered that Form 5500 had not been prepared or filed for the company’s welfare plan for over ten years. Their CPA contacted us to determine the scale of the problem and recommend a course of corrective action.

Our Solution
We recommended the company take advantage of the Department of Labor’s Delinquent Filer Program. This would allow the company to avoid any DOL or IRS penalties for non-compliance ($15,000 per missing return!). We assisted the company in obtaining Schedule A information from the insurance carriers, prepared all missing returns, and prepared the Delinquent Filer Program submission.