NAFCU Services Blog

Nov 07, 2023

It’s Never Too Late to Ask for Help

By: Wade Connor, Regional Director at Pentegra

What happens if a plan has some compliance failures and the Department of Labor (DOL) or IRS is knocking at the door? If or when, better yet, before that time comes, wouldn’t it be nice to phone someone who knows how to deal with these issues?

Plan sponsors fear a lot of different plan calamities, for example:

·       Late contributions

·       Late Form 5500 filings

·       Bad census data

·       Failed compliance tests

·       Payroll mishaps

·       Recordkeeping glitches

·       DOL and IRS audits

Even if a plan is already under audit by the DOL or IRS, Pentegra can assist. This first client case study clearly illustrates that “it is never too late to ask for help.” A plan sponsor had been under DOL audit for 10 long, frustrating, exhausting months trying to work through a compliance issue related to (what appeared to be) late contributions. Facing plan disqualification at the worst and steep penalties at the least, the plan sponsor engaged Pentegra as a last resort. Within four weeks, the case was brought to resolution with a very favorable outcome for the plan sponsor. In fact, the elated plan sponsor, in reference to Pentegra’s work stated, “This is the best thing since sliced bread.” How was such a quick, but thorough, solution possible?

Missed Restatement Deadline

Through Pentegra’s expert and meticulous sleuthing of several years of payroll files and plan deposits, what were thought to be missed contributions dating back to 2019, was really an inadvertent documentation error by the payroll department. The contributions had, indeed, been deposited to the plan. With the proper authorizing paperwork in place, Pentegra was able to work directly with the auditor on behalf of the plan sponsor client and produced the evidence that ultimately exonerated the plan.

In the process of working on the case, Pentegra discovered another compliance problem with the plan: Late Form 5500 filings. Because the plan sponsor had missed several filings, it was facing costly penalties. The DOL’s Delinquent Filer Voluntary Compliance Program (DFVCP) can be used to correct Form 5500 filing errors for a reduced penalty if the error is discovered before a notice of audit. In this case, the DOL had begun its audit to investigate the alleged missed deferral deposits; but the auditor had not identified the issue with the late Form 5500s. Consequently, Pentegra was able to prepare a submission through the DFVCP to correct the filing errors and save the plan sponsor thousands of dollars in penalties.

Escaping a DOL Audit

Pentegra’s knowledge and know-how with correcting late Form 5500 filings was put to use to help another plan sponsor escape a DOL audit. The DOL had been alerted that this particular plan appeared to have missed or incorrectly filed its 2021 Form 5500. Pentegra stepped in and, after looking at the change in participant count between years 2020 and 2021, used the special “80-120” participant counting rule to clear the plan sponsor of wrong doing, saving the client approximately $12,000 in costs and penalties. Pentegra’s acute knowledge of obscure filing rules saved the day in this case.

Let our fiduciary experts tackle this problem, so you can return your focus to your Credit Union. Contact to get started today.

For Plan Sponsor and Advisor use only. This material is provided for informational purposes only and does not constitute investment, tax, legal, or accounting advice on the matters addressed.

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