Blog

Contact Us for More Information

Forgot To File Your Annual Form 5500? There's Still Hope For Avoiding Costly Penalties

Posted by Corey F. Schechter | Jan 14, 2016 | 0 Comments

Plan sponsors of employee benefit plans subject to the requirements of the Employee Retirement Income Security Act (ERISA) are required to annually file a Form 5500 with the U.S. Department of Labor (DOL). The Form 5500 was developed by the DOL in cooperation with the Internal Revenue Service (IRS) and Pension Benefits Guarantee Corporation (PBGC) as a means of evaluating the economic stability and enforcing the operational compliance of these benefit plans, and according to the DOL is “part of ERISA's overall reporting and disclosure framework, which is intended to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards.”

Both the IRS and the DOL consider the information disclosed by these ERISA-governed benefit plans on the Form 5500 to be vital for effectively carrying-out the enforcement provisions of ERISA, and for that reason impose severe monetary penalties on benefit plans failing to file their required Form 5500 each year by the required due date as a tool for discouraging delinquent filings. The penalty imposed by the IRS is equal to $25 per day, but has a cap of $15,000. On the other hand, the penalty imposed by the DOL is $1,100 per day, with no cap on the penalty amount. Yes, you read that correctly – $1,100 per day, with no cap on the penalty! These can be potentially debilitating penalties to the continued success of an employee benefit plan.

With the above-noted potential sanctions, most would agree that timely filing your Form 5500 is a wise course of action. The deadline for filing your plan's annual Form 5500 is the last day of the seventh month of the following plan year. Thus, plans operating on a calendar year basis for their plan year, for example, will want to make sure that their Form 5500 for the preceding year is filed no later than July 31. Extensions to file your plan's Form 5500 are also available, provided they are timely filed.

But there is good news. Even if your plan missed the filing deadline and did not obtain the required extension, you are still able to significantly reduce the penalties noted above – so long as your plan has not yet received a notice of the delinquency from the IRS or the DOL. Basically, if you make the IRS and the DOL aware of your error before they catch you, by submitting an application under the Delinquent Filer Voluntary Compliance Program (DFVCP) created by the DOL, they will be much more lenient when imposing penalties on the plan.

Contact Butterfield Schechter LLP if you require assistance with the proper completion and filing of your employee benefit plan's annual Form 5500 or requesting an extension to file. Additionally, if your plan has missed its Form 5500 filing deadline and has failed to seek an extension, contact one of our highly qualified attorneys today to assist you in the completion of a DFVCP application to the DOL in order to significantly reduce the potential monetary penalties to your benefit plan.

About the Author

Corey F. Schechter

Corey Schechter practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Employment and Labor Law.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Retirement Plans

We help establish a customized plan that meets regulatory requirements as a tax qualified plan. Following implementation, our attorneys can assist clients and their plan administrator with regular reviews and updates to help with regulatory compliance for the plan's operation, and continued effectiveness in meeting the client's specific goals.

ESOPs

We are dedicated to employee ownership. When you come to us for ESOP services, you receive influential legal counsel who stand beside you to help you stay informed, in compliance, and abreast of the latest developments-all to help you realize your plan goals as fully and effectively as possible.

QDROs

A QDRO is a specially designed court order that is required for the division of retirement benefits in a family law case. Many family law attorneys do not possess the expertise necessary to divide retirement benefits or stock options upon divorce. We have extensive experience in dividing qualified plans, government plans, IRAs and stock options between the employee spouse and non-employee spouse.

Butterfield Schechter LLP provides the information in this website as a service to its clients and visitors to the site. This website is for information purposes only and is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The information in this website is provided "as is," and while the information in this website is updated periodically, additional facts or future developments may affect subjects contained herein, and no guarantee is given that the information provided is correct, complete, or up-to-date. Seek the advice of professional counsel before acting or relying upon any article, form, or information in this web site. To ensure compliance with the requirements imposed by the United States Treasury and the Internal Revenue Service, we inform you that any federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of: (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another person any transaction or matter addressed herein. Butterfield Schechter LLP has endeavored to comply with all known legal and ethical requirements in compiling this website. In the event that this communication does not conform with any laws or regulations of any state or country in which it may be received, Butterfield Schechter LLP will not accept legal representation based on this communication from a person in such a state or country. Electronic mail is provided as a convenience in communicating with the attorneys at Butterfield Schechter LLP. Contact by e-mail does not alone create an attorney-client relationship. Please remember Internet e-mail is not secure and messages sent to the firm or any of its employees or attorneys should not contain sensitive or confidential information. Thank you for visiting our site.

Menu