Can the Delinquent Filer Voluntary Compliance Program (DFVC) be used if your plan is under audit?

The Delinquent Filer Voluntary Compliance Program (DFVC) is designed to encourage plans to file delinquent Form 5500 filings without incurring penalties. However, if a plan is currently undergoing an audit, it is not eligible to use the DFVC. The rationale behind this restriction lies in the program's objective of allowing compliance outside of enforcement proceedings. When a plan is under audit, it implies that the regulatory agency is already actively investigating compliance issues, which removes the context for using the DFVC as a means to self-correct without penalties.

In essence, the primary function of the DFVC is to promote voluntary compliance for entities that have fallen behind in their reporting requirements, but the presence of an ongoing audit indicates a more serious level of scrutiny that the DFVC is not designed to circumvent. Therefore, the correct understanding is that the DFVC cannot be utilized while a plan is under audit.