Delinquent Forms 5500

[Guest Trirod]

I have a client who failed to file a Form 5500 for their health plan for 2001 and 2002 (calendar years). Because this was part of their Cafeteria plan, they misinterpreted Notice 2002-24 as meaning they did not have to file a 5500 at all for the plan (it has more than 100 employees).

What are the options? Are they best applying under the DFVC program and paying a $4,000 penalty? Any chance of getting this penalty reduced/abated either under this program or outside this program? I understand that the penalties outside of the DFVC program are potentially substantial, but $4,000 is still a decent hit that I would really like to try and avoid!

Thanks

[WDIK]

If you filed today (and I added correctly), the filings would be a total of 937 days late. This equates roughly to a daily penalty of $4.25 to beat the $4,000 DFVC fee. Seeing as how the maximum DOL penalty is $1,100 per day, plus another potential $25 per day for the IRS, I think I'd recommend the DFVC program.