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New Penalty Relief Available Soon for Some Form 5500 Late Filers

The IRS will soon launch a new pilot program that will give relief to certain plan sponsors and administrators from penalties for filing the Form 5500 or Form 5500-EZ late. Only those who are not entitled to automatic relief under Title I of ERISA will be eligible under the pilot program. The IRS announced in Notice 2014-35 that the program, established under Revenue Procedure 2014-32, will be open from June 2, 2014 to June 2, 2015.

Non-ERISA plans that cover only a 100-percent business owner or one or more partners, and their spouses, are eligible for this relief. Also eligible are plans that are maintained outside the United States primarily for non-resident aliens but are subject to IRS annual reporting requirements. 

The relief is substantial: A plan sponsor or administrator of these plans who is subject to the penalties can face fines of up to $15,000, plus interest, for each late return. 

Plan sponsors or administrators that have received a CP 283 Notice, “Penalty Charged on Your 5500 Return,” for a delinquent return do not qualify for relief under this program. Also, returns filed electronically through EFAST2 are ineligible for penalty relief under the pilot program. 

To qualify for the relief, a plan sponsor or administrator must: 

  • File the late return and any required schedules and attachments, using the original IRS form for that year (but using only a Form 5500-EZ for 2009 and later years even if the plan could have originally submitted a Form 5500-SF). 
  • For DB plans, prepare an annual actuarial report even if it does not have to be included with the filed return. 
  • Write in red letters in the top margin of the first page above the title of the form “Delinquent return submitted under Rev. Proc. 2014-32, Eligible for Penalty Relief” on each late return submitted (failure to do this may cause your late return to be ineligible for penalty relief).
  • Attach a completed one-page transmittal schedule to the front of each late return.

  • Mail the materials to the following addresses:

Forms 5500-EZ to:

Internal Revenue Service
1973 North Rulon White Blvd.

Ogden, Utah 84404-0020

Forms 5500 to:

Internal Revenue Service
Employee Plans Delinquent Filer Program
EP Classification
9350 Flair Drive

El Monte, Calif. 91731-2828

Program participants may use the U.S. Postal Service or the following private delivery services:

  • DHL Express: DHL Same Day Service.
  • Federal Express: FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Priority and FedEx International First.
  • United Parcel Service: UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus and UPS Worldwide Express.
John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.