Under the reporting and disclosure rules in the Internal Revenue Code and the Employee Retirement Income Security Act ("ERISA"), most employee benefit plans must file an annual report ("Form 5500"), generally within seven months after the end of the plan's year. If the required annual report either is not filed timely or is filed timely in an unsatisfactory manner, both the Internal Revenue Service ("IRS") and the Department of Labor ("DOL") may assess or impose one or more of the following penalties, unless the failure to file properly is for reasonable cause:

  • A fine of up to $1,100 a day for each day a plan administrator fails or refuses to file a complete and accurate report.
  • A fine of $25 a day (up to $15,000) for not filing returns for certain plans of deferred compensation, trusts and annuities, and bond purchase plans by the due date(s).
  • A fine of $1,000 for not filing an actuarial statement (Schedule MB or SB) required by the applicable instructions.
  • A fine of $100,000, imprisonment up to 10 years or both for willfully violating any provision of ERISA.
  • A fine of $10,000, five years' imprisonment or both for making any false statement or representation of fact or for knowingly concealing or not disclosing any fact required by ERISA.

If the plan administrator does not or cannot timely correct the deficiency and penalties are assessed, the DOL and IRS may waive or reduce Form 5500 filing penalties if the plan administrator either demonstrates "reasonable cause" for the filing failure or files a delinquent Form 5500 under the Delinquent Filer Voluntary Compliance Program ("DFVCP").

The DFVCP allows employers to file past-due employee benefit plan annual returns and thus become current and compliant, with greatly reduced filing penalties.

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