Form 5500 Late Filer Program

The U.S. Department of Labor recently created the Delinquent Filer Voluntary Compliance Program (“DFVC”). DFVC allows employers who have not filed one or more IRS Form 5500s on their retirement plans a chance to avoid penalties (normally up to $1,100 per day) that are assessed when a Form 5500 is filed late. Employers and Plan Administrators who have delinquent Form 5500s “hiding in the closet” should take this opportunity to come in out of the cold.

ELIGIBILITY

The program is available for all retirement plans that benefit more than just owners and their spouses. There is no limit on the size of the plan or the number of Form 5500s that are delinquent, although the fee charged for the program is determined by those factors.

PROGRAM REQUIREMENTS

To qualify for the reduced penalties under DFVC, the employer must file the late Form 5500 and required schedules with both the Department of Labor and the Internal Revenue Service. The filings must be accompanied with a pre-determined penalty (discussed below).

PENALTIES

The DFVC penalty for a late filing of a form 5500 is $10/day with a maximum fee of $750 ($2,000 for a large plan.) The program also includes a new “per plan” limit for an employer who has failed to file Form 5500s for multiple years. The per plan limit is $1,500 ($4,000 for a large plans). To qualify for the per plan limit, the employer must include the Form 5500s for all the plan years in the same submission. For example, an employer determines that it has failed to file a Form 5500 for its 401(k) plan (30 participants) since 1996. Under the DFVC program, the penalty for the six late Form 5500s would be $1,500.

For a Code §501(c)(3) tax-exempt organization filing for a small plan, the per plan limit is $750. For top-hat plans and apprenticeship training plans the fee is $750, regardless of the number of plans or the number of participants.

PROCEDURES

An employer filing a late Form 5500 will file the late Form 5500, part I, box D and attach a statement with “Form 5500, Box D – DFVC Filing” prominently displayed at the top of the statement. The employer should submit the penalty with a copy of the Form 5500 (without schedules) to: DFVC program, PWBA, PO Box 530292, Atlanta, GA 30353-0292, Submissions filed with the old address will be returned to the filer.

He employer may use the Form 5500 for the filing year, or it may use a current Form 5500, but marked to indicate the year for which it is filing the late Form 5500.

IRS RELIEF FOR LATE FILERS

Many employees benefit plans, including most retirement plans, are subject to both IRS and DOL annual reporting requirements. The Form 5500 filed with the DOL will satisfy the filing requirement for the IRS and DOL. Ordinarily, each governmental agency may impose its late filing penalty. However, the IRS has announced that late filers of Form 5500s who are eligible for and who satisfy the DFVC requirements with respect to a Form 5500 filing automatically will not be subject to the IRS penalties. Therefore, a late filer under DFVC will not need to make a separate request for a waiver of the IRS penalty. An employer that does not qualify for relief under the DFVC program (e.g., a one person plan filing a Form 5500EZ) will need to request an abatement of the IRS penalty. Traditionally, the IRS has granted an abatement of the IRS penalty.

For more information about DFVC, please feel free to call us.

Form 5500 Late Filer Program