Changes to IRS Penalty Relief for DOL DFVC Filers of Late Annual Reports
Since 2002, the IRS has waived its late filing penalties for Form 5500 series filers who satisfy the Department of Labor’s Delinquent Filer Voluntary Compliance Program requirements. However, due to changes to the DOL’s electronic filing system, filings under DFVC no longer include all information required by the IRS. The Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, which replaced the Schedule SSA (Form 5500), must be filed directly with the IRS. You are only required to file Form 8955-SSA for a year if you have separated participants with deferred vested benefits to report for that year.
The IRS has therefore modified the requirements for qualifying for IRS penalty relief. The IRS is now waiving its late filing penalties only for filers who:
- satisfy the Department of Labor’s Delinquent Filer Voluntary Compliance Program requirements for:
- Forms 5500, Annual Return/Report of Employee Benefit Plan, or
- Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan;
- file a paper Form 8955-SSA with the IRS if your plan had any participants with deferred vested benefits to report for the same delinquent tax year filings; and
- meet the requirements of Notice 2014-35 (see below).
Plans eligible for relief
Retirement plans governed by Title I of ERISA that:
- must file a Form 5500-series return (but not Forms 5500-EZ or 5500-SF for plans without employees); and
- are eligible for DOL’s Delinquent Filer Voluntary Compliance Program.
The IRS has a separate Form 5500-EZ Late Filer Pilot Program for relief from late filing penalties for non-ERISA plans that must file Forms 5500-EZ or 5500-SF because they cover only the owner, partner and spouses.
Requirement of Notice 2014-35 for penalty relief
You don’t have to request relief from the IRS. Instead, you can qualify for penalty relief if you complete the following steps:
- satisfy all of the Delinquent Filer Voluntary Compliance Program requirements
- file a paper Form 8955-SSA with the IRS if your plan had separated participants with deferred vested benefits (electronic filings aren’t eligible)
- check the box on Form 8955-SSA, Part I, line C (Special extension), and enter “DFVC” in the description on line C
- mail the Form 8955-SSA for the delinquent returns to the IRS (address in the instructions) by the later of:
- 30 calendar days after you complete the DFVC filing, or
- December 1, 2014.
IRS penalties that can be waived
In addition to DOL penalties, plan administrators may also face IRS penalties for not filing the plan’s Form 5500-series annual return and Form 8955-SSA by the required deadline. The IRS may impose a penalty of:
- $1 for each participant for whom the plan fails to file a Form 8955-SSA statement for each day the failure continues, up to $5,000 for any plan year
- $1 for each day for not filing a notification of change of status, up to $1,000
- $1,000 for each failure to file an actuarial report by the required deadline
- $25 each day the Form 5500-series return is not filed, up to a maximum of $15,000
- Notice 2014-35
- Form 5500 Corner
- Form 8955-SSA Resources
- New Penalty Relief Program for Form 5500-EZ Late Filers
- Revenue Procedure 2014-32 (pilot program for late Form 5500-EZ filers)