Missing that deadline to file a Form 5500 is a huge problem. Sometimes people forget even when the Third Party Administrator (TPA) completes it promptly. I’ve had clients not realizing they had a year or two years’ worth of 5500s that needed to be filed.
The greatest mistake they made was filing those late 5500s. Why? Well, they didn’t file those Form 5500s, coupled with a contemporaneous filing of an application to the Department of Labor’s Delinquent Filer Voluntary Compliance Program (DFVCP). By not filing with the DFVCP, a plan sponsor can get a crippling penalty of $150,000 per year (depending on how long the Forms are outstanding). It’s unsettling when the penalty amount of the DFVCP could be just $1,500 maximum.
The problem is so many plan sponsors aren’t aware of this option and there is only so much a TPA can do. So that’s why I’m mentioning that filing a late 5500 without DFVCP is a weapon of mass destruction.
