November 14, 2011

Form 5500 Non-Filer Project

Generally, a plan subject to ERISA must file an annual report, known as a 5500.  Certain exceptions apply, specifically to small welfare benefit plans.


The Department of Labor (DOL) established a Delinquent Filer Voluntary Compliance Program ("DFVC Program") to encourage voluntary compliance with the Form 5500 series filing requirement.  The DOL updated the program in 2002 to provide for further reduced penalties and streamlined administration (see Benefit Beat article, Delinquent Filer Voluntary Compliance (DFVC) Program Update).  Significant to the updated program is that if a plan sponsor brings its filings current with the DOL, then the Internal Revenue Service (IRS) would likewise honor the filing.  Under the prior program, the IRS was not obligated to respect a late filing submitted under the DFVC program.   In 2009, plans had commenced filing the Form 5500 electronically (see Form 5500 Updates). 

Non-Filer Project

Recently, the IRS, in concert with the DOL, have commenced a Form 5500 Non-Filer Project targeting Form 5500s that have not been filed for plan years ending in 2010 or later.  

To begin the process, if the IRS has no record of a Form 5500 filed with the DOL within 6-9 month period following the return’s due date, the IRS will send a compliance check letter to the plan sponsor. The letter will ask the plan sponsor to file the form, or provide an explanation as to why the form was not filed.  If the plan sponsor files the Form 5500, then the IRS will close its pursuit.  If the plan sponsor fails to respond to the letter, then the IRS may forward it to their enforcement division and/or Department of Labor.  If the plan sponsor is required to file the Form 5500 but fails to do so, the IRS will then send a Delinquency Notice asking employers to respond within 30 days.  If the employer fails to respond to the Delinquency Notice, then the IRS will send another delinquency notice requesting response within 30 days. 

The FAQs relating to the Delinquent Notices provide some specific guidance on how to respond in the event the plan has requested an extension, pursued the DFVC program, filed a terminal report, or is exempt from filing.

If your plan receives one of these letters, review the facts carefully, and respond in a timely manner.  Both the IRS and DOL impose penalties for failure to file the Form 5500.  The IRS penalty is $25 per day until the form is filed, up to a maximum of $15,000. The DOL may also assess civil penalties for the late filing of the same Form 5500 of up to $1,100 per day, with no maximum.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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