Large plan audit not done by extension deadline

Years ago before e filing, we had a large plan that filed right at the extension deadline with a "note" from the CPA stating something to the effect that the audit would be filed once completed. The plan sponsor filed the 5500 with the note and at some point after the extension deadline the audit was filed. Is this still an acceptable procedure? 

Not really!  It's something that has been done for decades in a 'blatant' attempt to circumvent the deadlines.  I believe that more recently the IRS has began to deem filings utilizing this procedure as not having been timely filed.  I'm not sure about this, as I haven't been able to substantiate it for myself, but I've read these things recently.  Not sure if that adds any value for you.

Good Luck!

Yes-ish. See Q25 of https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf

I don't believe it was ever acceptable.  It was more you could get away with it becasue it took them so long before electronic filing to realize it was missing.

What I can tell you is I have a couple clients that do this every year.  I just a few weeks ago filed a 12/31/2016 5500 with the report.  We filed with a note back last October.  So far they have never been fined for doing it.  But I always tell them they are at risk of it being ruled as incomplete.

So in short file incomplete and cross your fingers they do not assess before refiling with the audit attached?

That is my understanding.  The other choice is to file late and know what your fine is with a DFVC filing. 

IMHO, not filing on time because "the auditor attachment is not ready" is a terrible reason to be late. 

FWIW... in the list of EFAST2 Attachment Types (Section 5.10 in the IFILE User's Guide), there is an attachment type "Reasonable Cause for late filing" and an attachment type "Reasonable Cause for late or missing IQPA Report".  I've never used either of these, and not sure what should be in the attachment, but find it interesting...

There are a few thousand large plan 5500s filed on the extended date without the audit report each year.  A letter, which was probably mailed within a few days of the filing,  is received from the government noting the lack of the audit report and the fact that the filing is incomplete.  The recipient is given 45 days after the date of the letter to file an amended filing including the audit report.  If the amended filing is not received, the filing will be declared incomplete and penalties could be assessed back to the original due date.

Most of the time, the plan administrator has no control over when the audit report is completed.  I believe the DOL is aware of the difficulty and within reason will work with the plan administrator, but there are limits.

I agree with Kristina. We had this situation several times over last 3 years. It was exactly as she described.

Filing without the audit is never a good option as the Form 5500 is considered incomplete and therefore late without it.  A better solution would be to work with a firm that serves the plan audit marketplace year round and is able to help plan sponsors file well ahead of the July deadline.

20 hours ago, James M. Moyna said:

Filing without the audit is never a good option as the Form 5500 is considered incomplete and therefore late without it.  A better solution would be to work with a firm that serves the plan audit marketplace year round and is able to help plan sponsors file well ahead of the July deadline.

Nobody said it is a good option. However sometimes it is the only option.