Employers that offer group health plan benefits frequently overlook compliance with ERISA’s annual Form 5500 filing requirements. This creates enormous potential liability. Fortunately, the Delinquent Filer Voluntary Compliance Program (DFVCP) offers employers a simple and cost effective way to mitigate potential penalties. Without the DFVCP, those penalties might otherwise reach into the hundreds of thousands of dollars (or more). In this article, we’ll briefly describe the benefits of the DFVCP and the process for taking advantage of it.
Form 5500 Reporting Requirements for Group Health Plans
The Employee Retirement Income Security Act (ERISA) requires most employers that offer non-retirement benefits (such as health and dental coverage, life insurance, disability payments, and other welfare-related benefits) covering 100 or more participants at the beginning of a plan year to file a Form 5500. Plans offered by organizations exempt from ERISA (such as governments and churches) are exempt from the Form 5500 filing requirements.
Plan Administrators must file Form 5500s annually within seven months after the end of each applicable plan year. An extension of up to 2.5 months is possible by filing IRS Form 5558. For example, ERISA requires employers who sponsor calendar year plans to file their Form 5500s by the end of following July (unless they have filed a Form 5558 extension request before that date).
The potential penalties for failing to timely file a required Form 5500 are staggering. Both the Department of Labor (DOL) and the Internal Revenue Service (IRS) can separately assess penalties. IRS penalties are limited to $25 per day, up to a maximum of $15,000. The DOL penalties are authorized up to $1,100 per day with no maximum. At worst, those kinds of penalties jeopardize the entire business. At best, they jeopardize the loss of a lot of sleep.
The Delinquent Filer Voluntary Compliance Program (DFVCP)
The DFVCP is a formal program offered jointly through the DOL and the IRS. The program serves two purposes. It encourages employers to voluntarily correct annual filing violations and omissions. It also substantially reduces their potential penalty liability. The DFVCP limits late filing penalties to $10 per day with caps of $2,000 per Plan Year or $4,000 per Plan, whichever is less. Employers can accurately estimate their expected DFVCP payments in advance. The Employee Benefits Security Administration (EBSA) provides an online calculator.
Employers should plan to submit all delinquent Forms 5500 concurrently with the required DFVCP penalty payment. This maximizes their penalty risk reductions by maximizing the number of Plan Years to which the DFVCP applies. Employers have the option of mailing in their penalty payment along with paper copies of their Form 5500s. Alternatively, they can pay the penalties online and electronically file through the EBSA’s EFAST2 system.
Get Form 5500 and DFVCP Help from Admin America
Admin America is happy to assist employers with the preparation of any necessary Form 5500s. Our services include:
- preparation of signature-ready, machine-readable Form 5500s with schedules, guaranteed for electronic within five business days;
- Substantial fee discounts for Form 5500s prepared as the same time for multiple plan years for a single plan (or employer);
- Access to the expertise of our on-staff attorney; and
- Assistance with filing Form 5584 – Request for Extension for Time to File, if applicable.