Late Filing Form 5500

[Guest wwest]

There are penalties for filing Form 5500s late. Anybody have experience with late filing where you were assessed penalties? If so, what were they?

[BeckyMiller]

Since you submitted this question under the topic "welfare plans," I am assuming that these are late Forms 5500 for welfare plans. Most welfare plan Form 5500 filings are due only to the DOL. (The exception being cafeteria plan filings which are an IRS filing.) The DOL has publicly announced that it would require pretty serious and sympathetic facts to be willing to waive the late filing penalties. We had one case where the DOL waived the penalty but it was an unusual case where all of the officers of an ERISA plans were government employees with no familiarity with ERISA at all.

In the normal course of events, the best approach that we have found is to file the late returns with the DOL under their remedial relief program or DFVC. In preparing such filings, some creativity seems to work in determining how many welfare plans the sponsor actually has.

If the plan sponsor has already received notice of the late filings, less flexibility is available. However, even in these cases, we have heard of the proposed penalties being settled at less than half of the proposed amount when the filing is completed and accepted. The penalty for failure to file is generally assessed at $30,000 per year.

If you have a cafeteria plan that is also an ERISA welfare plan, you will need to negotiate both late filing penalties.

Before getting terribly concerned. I would recommend that you first check the numerous exemptions for filing certain types of welfare plans. These are found in the regulations under ERISA Section 104.

Good luck.

[Guest wwest]

What if welfare plans were filed 6 weeks late two years ago? Still recommend DFVC?

[BeckyMiller]

We can't rely on the fact that they have heard nothing on the filing. The processing system for Forms 5500 is extremely slow.

Since they filed them late already and did not take advantage of the DFVC program on the initial late filing, I would take no further action at this time.