Because the failure to file Forms 5500 would be a compliance failure, it would be best to consult with legal counsel to determine a path forward. One option that counsel could suggest would be to utilize the DOL’s Delinquent Filer Voluntary Correction Program (DFVCP) to file delinquent filings. The DFVCP gives delinquent plan administrators an opportunity to avoid higher civil penalty assessments if they satisfy the program’s requirements and voluntarily pay a reduced penalty amount. The program is only an option if the DOL or IRS has not already contacted the employer concerning the delinquent filings.
Participating in the DFVCP is a two-part process. First, the employer would electronically file a complete Form 5500 with EFAST2 for each year for which relief is requested. The employer would then electronically submit the filing information and payment to the DFVCP using the DFVCP calculator and webpage. The basic penalty under the program is $10 per day for delinquent filings. However, the DFVCP allows for a “per plan” cap, which is designed to encourage reporting compliance of employers who have failed to file a Form 5500 for one plan for multiple years. Under the per plan cap, the penalty for small plans is limited to $1,500, and the penalty for large plans is limited to $4,000. For more information, see the following DOL resources:
DFVCP FAQs » DFVCP Penalty Calculator, Online Payment Instructions, Examples and Manual Calculations »
PPI Benefit Solutions does not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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