After making several acquisitions, an American healthcare company was the sponsor of several different 401(k) plans. The plans were being managed individually by the acquired companies — now business units within the parent firm — and though the 401(k) plans had been in existence for several years, they had not made timely contributions and had never filed Forms 5500. Executive leadership wanted to merge the plans, but knew there were serious compliance issued that needed to be resolved before freezing the acquired plans.
SBA was engaged to review the plans, determine the amount of the late contributions and file Forms 5330 and 5500 for all plans. SBA reconciled bank statements, payroll data and recordkeeper statements against payroll deductions and deposit dates to determine which payroll contributions were deposited late. SBA then calculated the amount of interest on the late contributions to determine the penalty amounts to be filed on the Form 5330s. In addition, we worked with a company representative to complete two years of late Form 5500 filings as well as the current year’s filing.
As a result of SBA’s effort, all non-compliant plans were quickly brought current, allowing the plan sponsor to freeze its legacy plans and establish a new plan with better corporate governance and all the necessary controls in place to operate in compliance with federal regulations. The project was a big morale booster for employees, who had encountered significant delays in receiving their final benefits under the poorly managed legacy plans.
