To this dismay of plan sponsors, the daily operation of a qualified plan is not always in sync with the written plan provisions or completed in accordance with the Department of Labor or Internal Revenue Service regulations. Discovery of plan document or operational errors by the IRS or the DOL during an audit can result in penalties, fees and potential disqualification of the plan.
The IRS and the DOL each have two programs that permit plan sponsors to voluntarily come forward before an audit in order to correct certain errors under their guidance.
This program is established by a Revenue Procedure, which is updated periodically by the Internal Revenue Service. The Revenue Procedure establishes the timing, user fees payable to the IRS and a guideline of approved correction methods for operational and document errors. The following are examples of some of the errors correctable under this program:
For errors that do not align with the established guidelines and examples set forth in the IRS Revenue Procedure, the program permits sponsors to submit a request for review and approval of a proposed correction. These types of submissions can be done anonymously when circumstances would call for not providing full disclosure of the sponsor’s information unless the IRS agrees to the proposed correction.
This program is established by a Revenue Procedure, which provides for the filing of delinquent Form 5500-EZ filings. The program allows for a reduced user fee and corrective filing to avoid what can be severe late filing penalties.
This program was established to assist plan sponsors correct the following errors:
This program was established to assist plan sponsors file overdue annual reports (Form 5500). This program permits plan sponsors to pay reduced penalties if the delinquent 5500 filings are made prior to being notified by the DOL of the failure to timely file the annual report due. The Delinquent Filer Voluntary Compliance Program fee is reasonable, especially when compared with late filing penalties that can be assessed by the IRS and the DOL.
If you are interested in learning more about our correction of plan errors services, the Prime Retirement Solutions team is ready to help you.