Attention retirement plan sponsors...if you missed the October 15th Form 5500 extension deadline for your calendar year-end Plan, you are not alone, but you are at risk. Filing Form 5500 is a critical part of ERISA compliance, and late or missed filings can lead to substantial IRS and DOL penalties. Fortunately, there are steps you can take now to mitigate damage, reduce penalties, and get back into compliance. Here’s what you need to know.

What is the Form 5500 and Why the Deadline Matters?

Form 5500 is an annual informational return that provides the Internal Revenue Service (IRS) and Department of Labor (DOL) with information about your company’s retirement plan, such as plan assets and liabilities, participant counts, plan activity and operating compliance. 

For plans that are considered “large plan filers” (generally 100+ participants) an independent audit report is required to be attached to the Form 5500 filing. Check out our blog When does a 401k Plan Need an Audit for more information on this topic. For plans that are considered “small plan filers” (generally under 100 participants) there is no audit requirement. 

For calendar year-end plans, the original due date is July 31st, but sponsors can file Form 5558 to receive a 2 1/2 month extension, pushing the deadline to October 15th. For fiscal year plans, the original due date is 7 months after the plan’s year end, with an extension being an additional 2 1/2 months.

If you missed this extended deadline, the clock is now ticking.

Consequences of Missing the Deadline

Failing to file Form 5500 on time can trigger penalties from both the Department of Labor and the Internal Revenue Service.

1. Department of Labor (DOL) Penalties

Up to $2,739 per day for each day the filing is late. There is no maximum limit on DOL penalties.

2. Internal Revenue Service (IRS) Penalties

The penalty for failure to file Form 5500 is up to $250 per day, capped at $150,000 per plan per year, plus interest.

These penalties can accrue quickly, so prompt action is imperative.

What To Do If You Missed the Deadline

Time is of the essence. The longer you wait to file, the higher the potential penalties. Here’s what  Plan sponsors should do next:

1. Immediately begin preparing your delinquent filing.
   • Gather plan data, financial information, participant counts, and any required audit report necessary to file the late Form 5500 accurately.
2. Use the DOL’s Delinquent Filer Voluntary Compliance Program (DFVCP).
   • This program provides substantial penalty relief.  
   • DFVCP allows late Form 5500 filings with significantly reduced penalties – often between $10 and $2,000, depending on plan size and the number of filings.
   • Filing under DFVCP helps avoid further DOL enforcement.
3. Consult your TPA or ERISA counsel
   • If the Plan sponsor uses TPA they should be able to assist in compiling the necessary data and submitting under DFVCP. For complex plans or multiple years of missed filings, the recommendation is to consult ERISA legal counsel who can ensure proper handling and minimize risk.
4. Address IRS filing requirements separately
   • While DFVCP covers DOL penalties, the IRS requires a separate late-filing resolution, particularly for plans with Form 8955-SSA or other tax elements. Coordinate filings to ensure you're covered on all fronts.

Preventing Late Filings in the Future

To help stay on track and avoid late filings in the future, here are a few key considerations:

1. Regularly review compliance deadlines for your Plan (initial and extended).
2. Work with your TPA or advisor to ensure timely submissions.
3. File Form 5558 by the original due date if you need an extension.
4. Set internal reminders or compliance reviews regularly to help stay on track.

Missing the Form 5500 filing deadline, especially the extended October 15th deadline, can be a costly mistake. But if you act quickly and leverage the DFVCP, you can reduce your penalties and bring your plan back into compliance before additional issues arise.

Don't wait for a notice from the DOL or IRS. Take proactive steps now to avoid further compliance issues.