- IRS Issues Retroactive Relief Requirement for Delinquent Retirement Plan Form 5500
- June 17, 2014 | Authors: Brenna M. Clark; Adam B. Cohen; Andrea M. Gehman; Michael A. Hepburn; Paul R. Lang
- Law Firms: Sutherland Asbill & Brennan LLP - Atlanta Office ; Sutherland Asbill & Brennan LLP - Washington Office
Until now, those who used the Department of Labor’s Delinquent Filer Voluntary Compliance Program (DFVCP) to obtain relief from penalties for failing to timely file Form 5500 automatically qualified for relief from the related Internal Revenue Service (IRS) penalties. Pursuant to IRS Notice 2014-35 (the Notice), tax-qualified retirement plans (including some 403(b) plans) which have utilized (or in the future may utilize) DFVCP now must also file IRS Form 8955-SSA for the applicable years to qualify for relief from the IRS penalties. The Notice applies to any DFVCP filings submitted electronically - essentially those filed after December 31, 2009. The deadline for filing Form 8955-SSA with the IRS is (a) December 1, 2014, for any DFVCP filings made prior to November 1, 2014, or (b) 30 calendar days after the DFVCP is filed.
Filing Requirement, Penalties and Relief Under DFVCP
Failure to timely file Form 5500 can result in significant penalties under the Employee Retirement Income Security Act (ERISA) (up to $1,100 per day) and the Internal Revenue Code ($25 per day up to $15,000 per report for failure to file; $1 per participant up to $5,000 per failure to file a registration statement; and $1 per day up to $1,000 for failure to report a change in status). The DFVCP offers substantially reduced ERISA penalties for those who voluntarily correct the late filings. In addition, under Notice 2002-23, the IRS agreed not to impose penalties if the requirements of the DFVCP were satisfied; no separate IRS filing was required.
IRS Notice 2014-35
Notice 2014-35 imposes a new IRS filing requirement for those who have used, or will use, DFVCP to avoid penalties for failure to timely file a Form 5500. Because Form 8955-SSA and Schedule SSA (which Form 8955-SSA replaced in 2009) satisfy IRS (not Department of Labor) requirements, they cannot be submitted with a DFVCP filing. If a DFVCP filing was submitted after December 31, 2009, the plan administrator must now file a Form 8955-SSA with the IRS (by the later of December 1, 2014, or 30 days after the DFVCP filing) to avoid IRS penalties for the failure to timely file Form 5500. Form 8955-SSA must be filed in paper form (not electronically).
If you filed for relief under DFVCP after December 31, 2009, you may need to file Form 8955-SSA by December 1, 2014, to avoid IRS penalties for the late Form 5500 filing.