One of my clients, Barry, called the other day with a common question:

“I was late submitting our weekly payroll contributions. Is that a big deal? I calculated the loss of earnings—about ten dollars, filed Form 5330, and paid $1.50 in excise tax. But that all seemed too easy so I thought I’d give you a quick call.”

“Well mostly, you did the right thing, but when you are late on one or more salary deferral remittances you have to report that to the IRS with the Form 5500 series—and that’s like having a black mark on your credit report. This Form 5500 submission opens the eyes of the Department of Labor. They will almost certainly send you a letter requesting that you enter into their Voluntary Fiduciary Correction Program (VFCP).

“But it’s voluntary, right. Doesn’t it make more sense to not submit anything—just pay the small penalty and the tax and move on without making noise?”

“Many people do take that route, Barry, but by not using the VFCP you raise the risk of a full-blown audit of the entire plan from top to bottom.”

“That sounds expensive!”

“Well, between the cost of hiring counsel and bringing in your retirement consultants to represent you in the audit…”

“I get it. So what do we do next?”

“The good news is that you’ve recently become our client. Let’s get you set up so our team submits the contributions for you and keeps you off the IRS’s or DOL’s radar. And though this won’t ever happen, since you hired us to provide full 3(16) services to the plan, we are fiduciaries; we stand by our work. If a contribution is missed on our watch, we’ll spend our time and money to correct the problem.”

“I like that,” said Barry. “So I guess what we do next is…”

“Yes. Nothing at all. We’ll take care of it. That’s what Professional Retirement Plan Managers do!”

If you’ve been too busy growing your business to save for retirement, you’re not alone. Get in touch with a Professional Retirement Plan Manager and start building your future today.