IRS Provides Penalty Relief for Late Form 5500 Filers

Plan administrators that fail to timely file their Form 5500s can be subject to penalties under both ERISA and the Code.  The Department of Labor’s Delinquent Filer Voluntary Compliance Program (“DFVCP”) provides plan administrators with the opportunity to pay reduced Department of Labor penalties for late Form 5500 filings.  The DFVCP among other things, requires plan administrators to file the late Form 5500s through the DOL’s EFAST2 system.  The DFVCP, however, does not address any penalties that may be imposed by the IRS.

In recently released IRS Notice 2014-35, the IRS stated that it will not impose penalties under Code Sections 6652(d), 6652(e) and 6692 on late Form 5500 filings if the plan administrator: (i) is eligible for and satisfies the requirements of the DFVCP, and (ii) files separately with the IRS a Form 8955-SSA that provides the information required under Code Section 6057 for the late year and otherwise satisfies the requirements of Notice 2014-35.  The Form 8955-SSA will otherwise satisfy the requirements of the Notice if: (A) it is not filed electronically (i.e., it must be filed on paper with the IRS), (B) the plan administrator checks the box on Line C, Part I (Special Extension) and enters “DFVC” in the space, and (C) it is filed by the 30^th calendar day after the DFVCP filing is completed, or by December 1, 2014, if later.

It is important to note that the Form 8955-SSA requirement applies to any DFVCP filings submitted through EFAST2 (i.e., all DFVCP filings after December 31, 2009), regardless of whether the filing was submitted before May 9, 2014.  For example, if a plan administrator went through DFVCP to correct a late 2008 Form 5500 in 2012 and the information required to be filed under Section 6057 of the Code was never filed for 2008, a paper Form 8955-SSA must be filed with the IRS no later than December 1, 2014.

The full text of Notice 2014-35 can be found here.