Almost every sponsor of every tax-qualified retirement plan must obtain a fidelity bond in accordance with section 412 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Despite the broad application of this requirement, a surprising number of plan sponsors are unaware of this requirement and, in fact, do not have a bond at all or do not have a bond in the proper amount. Consequently, this article is written in order to help explain the requirement in order to attempt to ensure that those who are subject to this requirement satisfy it.

This article is intended to share with you a recent change to the Department of Labor’s (“DOL”) enforcement procedures regarding the late remittance of participant elective deferrals by plan sponsors. Unfortunately, the DOL appears to have adopted a more aggressive and threatening approach with regard to plan sponsors who attempt to correct such failures without pursuing “pristine” correction under the DOL’s “Voluntary Fiduciary Correction Program” (“VFCP”). The following explains this issue, its history and what plan sponsors should be prepared to experience in connection with these matters going forward.

Each year qualified retirement plans must successfully navigate through a myriad of deadlines and due dates. One of the most important deadlines for most plan types relates to the Department of Labor’s annual filing of the Form 5500. Each Form 5500 must accurately reflect the characteristics and operations of the plan or arrangement being reported. The requirements for completing the Form 5500 will vary according to the type of plan or arrangement. This filing is due by the end of the 7th month following the end of the plan year; for calendar plan years this is July 31st. A plan may obtain a one-time extension of time to file a Form 5500 annual return/report (up to 2½ months) by filing IRS Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, on or before the normal due date, thereby making the extended due date October 15th for calendar year plans.