Correcting your late deferrals by depositing them and making a contribution to compensate for lost earnings in your 401(k) plan isn’t sufficient.
Why? Because Form 5500 requires you to honestly indicate whether you have late deferrals. If you answer “yes” (which you must, or you risk penalties for perjury), this alerts the Department of Labor (DOL) to your situation. The DOL will review their records and check if you submitted a Voluntary Fiduciary Compliance Program application. If you haven’t, they will reach out to you and recommend that you do so, which will also involve filing Form 5330. Many plan sponsors avoid this process due to the cost and choose to wait for DOL contact instead. From my experience, I prefer to address potential problems proactively and resolve them ahead of time.
