Welfare Benefit 5500- Filed 5500- Two days late

The client thought they had filed the 5500 for their welfare plan when it was signed on 7/21; however it was not realized until 8/4 that it was never actually filed, so they filed on 8/4.  The deadline of July 31st which fell on a Saturday so the next business day was August 2nd.  So it was technically filed 2 days late.  I know the DOL can assess penalties per day for being late.  What’s the likelihood the DOL will penalize them?

4 hours ago, Danielle said:

The client thought they had filed the 5500 for their welfare plan when it was signed on 7/21; however it was not realized until 8/4 that it was never actually filed, so they filed on 8/4.  The deadline of July 31st which fell on a Saturday so the next business day was August 2nd.  So it was technically filed 2 days late.  I know the DOL can assess penalties per day for being late.  What’s the likelihood the DOL will penalize them?

Was plan sponsor on extension? Is fiscal year of plan's sponsor same as plan?

The plan sponsor was not on an extension.    It was for plan year ending 12/31/2020.   Their 401k retirement plan follows the same plan year (1/1-12/31).  

I just checked and they have not filed their retirement 5500 yet that would have been due at the same time.  Historically they have been filing under an extension so I’m assuming they will again be filing in October with an extension for plan year ending 12/31/2020.  

Consider dfvcp. Isn't it cheap? Like $10 per day?

Yes you are correct but I thought that needed to be done before filing because you need to select that on the 5500 when you do file.  The client already filed when they realized they were late. 

I'm not aware of DFVCP being restricted by a prior filing.

Although I don't see it as an explicit requirement in the DFVCP guidance, my recollection too was that once you filed you could not use DFVCP (but could only amend). Would be interested to hear if others have done this successfully.

53 minutes ago, EBECatty said:

Although I don't see it as an explicit requirement in the DFVCP guidance, my recollection too was that once you filed you could not use DFVCP (but could only amend). Would be interested to hear if others have done this successfully.

To the best of my recollection, it goes like this:

1. File late (not DFVCP)

2. Get IRS late filer penalty letter

3. Go through the DFVCP steps, including payment

4. Respond to IRS late filer penalty later with certain information from the DFVCP filing.

33 minutes ago, RatherBeGolfing said:

To the best of my recollection, it goes like this:

1. File late (not DFVCP)

2. Get IRS late filer penalty letter

3. Go through the DFVCP steps, including payment

4. Respond to IRS late filer penalty later with certain information from the DFVCP filing.

 

Correct. You're golden as long as the client hasn't received a late notice from the DOL.

Interesting. So do you file an amended 5500 marking DFVCP when you complete the rest of the DFVCP process?

10 minutes ago, EBECatty said:

Interesting. So do you file an amended 5500 marking DFVCP when you complete the rest of the DFVCP process?

No. You would respond to the penalty letter with the DFVCP information.

On 8/9/2021 at 10:27 AM, EBECatty said:

Interesting. So do you file an amended 5500 marking DFVCP when you complete the rest of the DFVCP process?

I do it this way.  Because if for some reason the DOL comes knocking first, you lose the ability to file under DFVCP.  Or am I wrong in that?