Administration

I have been the sole administrator for my company for a long time now.

In doing so I have learned a massive amount about business, accounting, insurance, etc.

The other day I received a letter from the IRS telling me that my form 5500 for the year 2010 had yet to be filed.

I was quite sure that they were wrong so I did a little investigating.

My company use to have a 401k program and there was a company that was doing the admin side of it.

A few years ago I received an invoice from them for things they had never done and I told them that I would never pay that invoice, after all it was a 1200 dollar deal and I had no idea what it was for.

Well I am thinking that maybe I should have paid that invoice.

In 2008 I discontinued the 401k plan and it turns out that 2009 was to be my final filing that this company was supposed to do and that's what they were billing me for.

I contacted the company and they were great. They knew exactly what to do and they only charged me $500 to do the filing and prepare my response to the IRS.

Now comes the kicker.

In order to avoid massive penalties set forth by the Department of Labor I had to send them a late filing fee of $750. Yes, that's right $750.

Once explained to me I gladly wrote that check.

In a pension plan situation if there is a late filing there is an accumulated penalty of $1000 a day is what I was told.

Apparently if this preemptive strike is not taken they accept your filing and then say thank you and send you a penalty, to which no one knows how it will turn out.

Lesson learned. Always ask what the invoice is for.

In the long run it only cost me 50 more than the original invoice but it caused a bit of temporary anxiety and frankly was an unnecessary hassle.

Funny how  mistakes seem to have a more striking effect on me.