(b)lines Ask the Experts – IRS Relief for Late Form 5500s

May 20, 2014 (PLANSPONSOR (b)lines) – “I read a recent article in (b)lines which indicated the Internal Revenue Service (IRS) is waiving its penalties for filing late 5500 annual reports if the Department of Labor’s (DOL’s) Delinquent Filer Voluntary Compliance (DFVC) program is used.

“I am aware the DOL could charge a penalty of up to $1,100 per day for late 5500 filings, but was not aware the IRS could charge a penalty for late filings as well. Is this a recent development?” See “IRS Provides Relief for Late Form 5500 Filers.”

Michael A. Webb, vice president, Cammack Retirement Group, answers: 

The IRS penalties for late filings have existed for many years, but the Experts can emphasize with those who may be confused. A few years ago, with the advent of the DOL’s EFAST e-file system, all Form 5500 annual returns are filed with the DOL electronically. Unfortunately, since all forms (with the exception of Form 8955-SSA) are now filed with the DOL, some plan sponsors have made the incorrect assumption that only the DOL could assess penalties for late filings.

However, the IRS may also assess penalties for late 5500 filings as well. The penalties are not as substantial as the DOL penalties—$15 per day, capped at $15,000 per return—but, up until now, there was no formal program to avoid the penalty if the filing deadline was missed.

However, as the article indicates, the IRS will now waive such penalties if a) the DOL’s DFVC program is utilized to address the late filings, and b) any 8955-SSA for the year of related DFVC filing (if also delinquent) is filed with the IRS no later than 30 days following the completion of the DFVC filing or December 1, 2014. It should also be noted that there is also a small IRS penalty for late Form 8955-SSA filings of $1 per separated participant that was not reported, up to a maximum penalty of $5,000 per return. This penalty is similarly waived if the aforementioned procedure is followed.

Thank you for your question!


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.