Editor's Note: This is the tenth installment in a series concerning correcting plan loan failures.
Q. I have a client that self-corrected and just got a letter last week a Department of Labor (DOL) office due to late deferrals reported on the 2018 Form 5500-SF. The letter is not threatening, but still suggests that they file through the Voluntary Fiduciary Correction Program (VFCP). They already self-corrected with lost earnings and the filing of a Form 5330. Should I be concerned if we do NOT file with the DOL VFCP? Do you expect we will get many of these letters this year? I thought the DOL would stop sending them after the feedback that they received last year.
A. The DOL letter for late deposit of deferrals and loan payments is common. Many practitioners respond to the letter outlining the correction methods they employed. Generally, this satisfies the DOL. However, you may want to seek the opinion of the plan’s attorney.
Editor’s Note: This content is taken from “Loans: Correcting Taxation, Qualification and Fiduciary Failures,” an April 15, 2020 ASPPA Webinar presented by Stephen W. Forbes J.D., LL.M. of Forbes Retirement Plan Consulting.
Opinions expressed are those of the author, and do not necessarily reflect the views of ASPPA or its members.
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