Additional Requirements Needed for Late Filers of Form 5500

Posted on June 16, 2014

Employers or other plan administrators who fail to timely file Form 5500 annual reports for their retirement plans may be subject to penalties under both the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). The Department of Labor (DOL) may assess civil penalties of up to $1,100 per day for failure to file complete and timely annual reports. The IRS may impose further penalties of $25 per day, up to $15,000 per return, for failure to file complete and timely annual returns.

The DOL previously established a delinquent filer program (DFVCP) to encourage late filers to voluntarily comply with ERISA’s reporting requirements. Under the DVFCP, plan administrators may obtain reduced civil penalties for failure to file a timely Form 5500. IRS previously announced that it would not impose any penalties under the IRC for a late Form 5500 filed by a plan administrator who satisfies the requirements of the DFVCP. Thus, a successful DOL filing relieved the late filer from penalties under both ERISA and the IRC.

Beginning in 2009, the form 5500 had to be filed electronically with the DOL under a program known as EFAST2. Starting in that year the former 5500 schedule SSA was removed and replaced by Form 8955-SSA which is filed directly with IRS only. In 2013, the DOL confirmed that late filers would not be permitted to submit Form 8955-SSA (or schedule SSA) under the DFVCP, even for 2008 and prior plan years. It stated that IRS would be addressing the filing issue separately.

The IRS has now addressed this gap by establishing a new procedure for obtaining relief from the late-filing penalties imposed under the IRC. In addition to filing the Form 5500 under DFVCP, a late filer must also file a complete Form 8955-SSA for that year no later than 30 calendar days after the filer completes the DFVCP filing. The 8955-SSA form must be filed on paper with the IRS. A separate application for penalty relief does not need to be filed with the IRS. They will coordinate with the DOL in determining which late filers are eligible for relief.

Because the IRS relief applies to any filing under DFVCP filed under EFAST2 (filings after December 31, 2009, a transition rule is provided whereby filers have until December 1, 2014, to file Form 8955-SSA with respect to a year for which a prior, post-2009 DFVCP filing was made.

Plan Sponsor or Administrators who have already obtained relief from the DOL penalties under the DFVCP must file the appropriate Form 8955-SSA with the IRS before the December 1, 2014, deadline. If you or your client has previously filed under DFVCP, contact your Plan Account Manager, or call 800-524-4014, option5, to discuss if you need to Form 8955-SSA before the December 1, 2014, deadline.

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