Jeffrey Thomas, company president and plan trustee, pleaded guilty to filing a false Form 5500 for the company’s profit sharing plan. The court imposed $153,000 in penalties and fines and a one-year term of federal probation upon Thomas. In 2002, Thomas instructed custodian New England Life Insurance Company to issue a check of $200,000 to the plan trustees. The funds were deposited at a bank in the name of the plan. Subsequently, Thomas withdrew funds from the bank account to invest in other business interests. Thomas must have returned the money to the plan because the case summary indicated that the plan did not suffer a loss. The false statement related to question 4d (of Schedule H or I) in which the DOL asks whether the plan has engaged in a prohibited transaction with a party-in-interest. Although the more serious violation was the misuse of plan assets, the government utilized the false statement on the Form 5500 to extract the guilty plea from the company president.

This case is the second case in the last couple of months in which the government has obtained a conviction for a matter relating to the Form 5500. Practitioners should remind their clients of the importance of accurately completing the Form 5500. In the Form 5500 Workshop, we thoroughly discuss how to complete the Form 5500 and its schedules. The 401(k) Workshop takes place on the day following the Form 5500 program. We have added a topic to discuss the new DOL regulations and guidance on the new safe harbor rule for transmitting elective deferrals and the allocation of fiduciary responsibility for collecting delinquent contributions.

The 5500 Filing Guide includes a complete discussion of how to report late deposits of elective deferrals as well as answers to your other difficult Form 5500 questions.