Possible to get 5500 late fees waived for final filing?

[TPApril]

7/31 plan year for medical plan 5500 filing did not file form 5558 by 7-month due date (2/28). Filing itself will be filed as 'Final' with no Schedule A's. Employer's fiscal year is not 7/31. Filing itself will be filed by extended due date of 5/15, even though there is no extension.

Question is: Any chance the late penalty can be waived, in light of this being essentially a blank 5500? (Would not be asking this question regarding a regular ongoing 5500 that missed filing form 5558)

[ESOP Guy]

When the IRS sends the letter after you file it doesn't hurt to ask for a waiver. I only file 5500 for retirement plans but my experience is if you can show the cause was unintentional and it won't happen again I get a waiver for my client. In fact I can't remember the last time a client actually paid a fine on a late 5500. We don't have that many and most are caused by odd situations that I can explain. With 5500s it seems like they are more interested in getting the form then money from the form.

[TPApril]

ESOP Guy - thanks! never asked for a waiver before. generally how long does it take to receive such a letter and do you always receive one? Also, do you then leave the DFVC blank and simply file late?

[Lou S.]

We used to get waivers quite a bit back in the days before DFVC but with the programs available I'm not sure how lenient they are these days. If you are filing on 5/15 you are looking a possible $1,900 penalty if the IRS refuses to waive it. $25 x 76 days verse a $750 fee if small plan or $760 if large plan under DFVC $10 x 76 days.

I'd present the option to the client explaining that they can file under DFVC for $750 and be done with it or they can file and request a waiver of the penalty when the IRS sends them a letter but there is no guarantee the IRS will waive late filing fees.

Also you might want to let them know your cost for requesting the waiver and that might factor into their decision to just file under DFCV.

[TPApril]

ESOP Guy - also wondering if there is an increase in risk exposure for the plan sponsor of being audited.

Lou S - all great points.

[jpod]

If this is a welfare plan there is no penalty assessable by IRS. DOL penalty only.

[ESOP Guy]

Actually I think Lou might have the better plan.

[jpod]

Presumably there were 100 or more participants at the beginning of the plan year because if not there would be no 5500 requirement. TPApril, it's good to ask the question and get some war stories from others, but quite frankly why would you ever advise the client to consider playing Russian Roulette to save a measly $760?

[TPApril]

jpod - all good points. No not looking to present risk to company at hand, just looking for solutions I might not be aware of that would exclude such risk.

[jpod]

I am sure you will hear plenty of happy ending stories that will make you or client feel like a sucker for going down the DFVCP route, but nonetheless it is not a worthy gamble in my opinion.