Plan sponsors who have not filed a Form 5500 can take advantage of the delinquent filer voluntary compliance (DFVC) program.
Background
The Department of Labor has the authority to assess penalties of up to $1,100 per day for late or incomplete filings of the annual report Form 5500. The Internal Revenue Code (IRC) imposes a $25 per day penalty for failure to file a Form 5500. The IRC penalty applies for each day until a return is filed up to a maximum of $15,000 per plan year. The maximum penalty is reached in less than two years. This penalty may be waived if the employer can show good cause for the late filing. The DOL also has the authority to waive all or part of the penalties if the plan sponsor can show reasonable cause for the failure to file the form, or why the penalty should not be assessed. The Delinquent Filers Voluntary Compliance Program (DFVC) was created in 1995 to encourage employers to voluntarily submit late filings in return for a reduced penalty fee.
Scope of the DFVC Program
Eligibility for the program is limited to employers who have not been notified in writing that they have failed to timely file an annual report. In addition, program eligibility is limited to plans subject to Title I of ERISA. Thus, employers filing Form 5500-EZ are not eligible.
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