Final 5500 return - late for filing 5558

Hi

Just curious about the following:

Calendar plan, final distribution done in November 2020 i.e. final 5500 form is due 6/30/2021. So a short plan year.

I was just told about this today which means 5558 was not filed timely.

The sponsor is a calendar C-corp which went on extension for the 2020 filing. So the due date of the 2020 corporate tax return is extended to 10/15/2021.

Can the sponsor rely on this automatic extension and file the final 5500 forms by 9/15/2021 - extended due date for a November filing? Or it has to be thru DFVCP?

The following condition from the instructions may not make it possible:

(1) the plan year and the employer’s tax year are the same.

Your comments are appreciated.

Thank you

11 hours ago, Jakyasar said:

The following condition from the instructions may not make it possible:

(1) the plan year and the employer’s tax year are the same.

Yes, being precise, the plan year end was 11/30 so this doesn't work.  Having said that, I'd just file it as a full year and move on.  Sorry to anyone who thinks that is godawful.

Hi Bird,

I for one do not agree with your approach, sorry.

Kind of agree though cannot do on corporate extension.

Will see if other opinions.

Thank you,

Unfortunate but the DFVCP is the best option.   While no one wants to pay it the cost is reasonable compared to many other options that could leave someone at risk of the full fine. 

Bird's idea is playing the audit lottery which is most likely low risk but not sure I would do it.

I agree with DFVCP, that's what we do for our clients. BTW, has anyone received responses from DOL lately and within what time frame ?  Thanks.

Our last one 8 months ago took about 4 months door to door top receive approval.

On 7/16/2021 at 5:16 PM, Jakyasar said:

Hi Bird,

I for one do not agree with your approach, sorry.

Aargh, I should just let it go and not come across as a jerk or someone with no moral code.  But let me explain my reasoning, which applies to a lot of these issues.  What is the worst case scenario for the client?  They get "caught" and have to pay a late filing penalty?  What is that cost, and what is the cost of going through the hoops of a DFVC filing?  If it is a consience/moral thing, and you just can't do something "wrong," ok.  But there is a flip side to that, and you are (presumably) charging the client (and making money for yourself) when you insist on doing the DFVC filing.  Maybe it's because I am, or was, an owner, and was always sensitive to the bottom line...not necessarily making as much as possible but doing the right thing for the client in the overall scheme of things and being fair.  And my moral code wouldn't let me do something so...wasteful (at least in my view).

40 minutes ago, Bird said:

What is the worst case scenario for the client?  They get "caught" and have to pay a late filing penalty?  What is that cost,

A penalty of up to $2,233 a day for each day a plan
administrator fails or refuses to file a complete and accurate
report. See ERISA section 502(c)(2), 29 CFR 2560.502c-2, and
the Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015 (2015 Inflation Adjustment Act).
Pub. L. No. 114-74; 129 Stat. 599 and the DOL’s implementing
regulation at 85 FR 2292 (Jan. 15, 2020).

44 minutes ago, Bird said:

and what is the cost of going through the hoops of a DFVC filing?

$750, if it is a small plan. The "hoops" are just submitting your info on the DOL's website and then paying the fee on pay.gov.

44 minutes ago, Bird said:

If it is a consience/moral thing, and you just can't do something "wrong," ok.  But there is a flip side to that, and you are (presumably) charging the client (and making money for yourself) when you insist on doing the DFVC filing.  Maybe it's because I am, or was, an owner, and was always sensitive to the bottom line...not necessarily making as much as possible but doing the right thing for the client in the overall scheme of things and being fair.  And my moral code wouldn't let me do something so...wasteful (at least in my view).

For those of us subject to Circular 230, we would risk our own professional livelihoods by encouraging a sponsor to report false information to the government. Other professional organizations also require their members to adhere to certain codes of professional conduct, and individuals violating those codes could be sanctioned or expelled.

Not that it would change my analysis, but our firm charges the same fee to prepare a timely 5500 that we do for a late one. The $750 goes to the government, not to us.

Hi Bird - you certainly don't come across as an immoral jerk - you are offering an opinion on a practical approach. That said, I also would not do this - as ESOP says, the DFVCP cost is so insignificant compared to potential penalties that it doesn't seem worth the risk (however small) to me.

Agree with Belgarath and CB . Upon audit, far too many issues plus the monumental dollar amount for penalty instead of $750. The client would blame me if I took the practical approach.

Thank you all for your input.

On 7/19/2021 at 10:39 AM, C. B. Zeller said:

A penalty of up to $2,233 a day for each day a plan
administrator fails or refuses to file a complete and accurate
report. See ERISA section 502(c)(2), 29 CFR 2560.502c-2, and
the Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015 (2015 Inflation Adjustment Act).
Pub. L. No. 114-74; 129 Stat. 599 and the DOL’s implementing
regulation at 85 FR 2292 (Jan. 15, 2020).

I want to (sheepishly) thank you for reeling me in here.  While I think the appropriate reference is the "regular" $250/day penalty (no one is failing or refusing to file a return, although yes I see the word "accurate" in there...), I have to admit I was mixing up the $25/day DFVCP penalty with that one and thinking the worst case was just paying the $25/day.  I don't mind admitting when I'm wrong and here I was just flat-out wrong, bordering on stupid - maybe over that edge but let's not go crazy.

On 7/16/2021 at 7:58 AM, Bird said:

Yes, being precise, the plan year end was 11/30 so this doesn't work.  Having said that, I'd just file it as a full year and move on.  Sorry to anyone who thinks that is godawful.

We were just talking about this int he office.  I just file full-year forms.  I've had two plans (over 25 years in the business) that were audited post-termination and in neither case was it mentioned.

Side note:  I do try to get them done within the 7 months after the last assets leave.  But sometimes you just don't know until way late.  I had a plan on a record-keeper who was also the document provider.  So, the sponsor does amendments with them.  A few years ago, they did an amendment to terminate the plan, and all the assets were out by February.  We did not get the census request back until April of the next year.  That is the time we go out and download the reports.  So, we did not know the plan terminated and was liquidated until 14 months after the fact.  We just filed a full year 5500-sf and moved on.