We use cookies to improve your experience and optimize user-friendliness. Read our cookie policy for more information on the cookies we use and how to delete or block them. To continue browsing our site, please click accept.

Form 5500 Filings: Steps to Avoid Costly Penalties

What is Form 5500 & who is required to file?

The DOL website defines the Form 5500 as:
The Form 5500 is part of ERISA’s overall reporting and disclosure framework, which is intended to ensure that employee benefit plans are operated in accordance with certain prescribed standards and regulations that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.

A return/report must be filed every year for every pension benefit plan, welfare benefit plan, and for every entity that files as a Direct Filing Entity. If you are a small plan (generally under 100 participants at the beginning of the plan year), you may be eligible to file the Form 5500-SF instead of the Form 5500. For more information, see the instructions to Form 5500/Form 5500-SF.

Avoid Costly Penalties

If you have failed to file Form 5500 for this past tax year or previous tax years, your organization may be subject to penalties from both the IRS and the DOL.

  • The IRS penalty for late filing of a 5500-series return is $25 per day, up to a maximum of $15,000.
  • The DOL penalty for late filing can run up to $1,100 per day, with no maximum.

If you find you didn’t file Form 5500, there is an opportunity for relief via the Delinquent Filer Voluntary Correction Program.

What is the DFVCP and Who is Eligible to Participate?

The Delinquent Filer Voluntary Correction Program (“DFVCP”) is an opportunity for pension and welfare plan administrators to file their overdue annual report, Form 5500/5500-SF, with the DOL. Plans that file under the DFVCP are eligible for reduced civil penalties related to late filing.

To be eligible to file under the DFVCP, Form 5500 annual reporting must be required under Title I of ERISA. The program does not apply to plans covering only self-employed individuals or sole owners (including spouses). Reporting for these plans is only required by the Internal Revenue Code and is not subject to Title I of ERISA.

Plan administrators must complete this process before they have been notified by the DOL  via written notice of failure to file. An Internal Revenue Service (“IRS”) late-filer letter will not disqualify a plan from participating in the DFVCP. A DOL Notice of Intent to Assess a Penalty will always disqualify a plan.

Withum can assist you to file through the DFVCP through the following process:

  1. A complete form 5500/5500-SF must be electronically filed for each year the plan is delinquent. Withum can prepare and file these forms electronically on your behalf.
  2. Penalty Calculation: Penalties are calculated based on the plan size and number of days the annual report is considered late. Please note that plan assets cannot be used to pay civil penalties. Penalties vary depending on plan size and not-for-profit status. Withum will calculate and confirm the penalty on your behalf.
  3. Submit the payment. The penalty is generated through the DOL website and can be paid either electronically or with a paper check; however, the DOL strongly recommends electronic payment submission. To ensure accuracy, Withum can guide you through the payment process.

Author: Carly Luczak, CPA, MBA | cluczak@withum.com and Linda Gnesin, CPA | lgnesin@withum.com

For questions or to further discuss the impacts of a late Form 5500 filing, contact a member of Withum’s Employee Benefits Services Group by filling out the form below.

How Can We Help?

Previous Post
Next Post
Article Sidebar Logo Stay Informed with Withum Subscribe


Get news updates and event information from Withum