2014 Form 5500 Update
Posted on May 30, 2014 by Legacy Retirement Solutions
Each year qualified retirement plans must successfully navigate through a myriad of deadlines and due dates. One of the most important deadlines for most plan types relates to the Department of Labor’s (DOL) annual filing of the Form 5500. Each Form 5500 must accurately reflect the characteristics and operations of the plan or arrangement being reported. The requirements for completing the Form 5500 will vary according to the type of plan or arrangement. In addition to the Form 5500, qualified plans may be required to file a Form 8955-SSA, which is the successor to the Schedule SSA (previously part of the Form 5500 submission). Form 8955-SSA is a stand-alone reporting form filed with the Internal Revenue Service (IRS) which reports information about separated participants with deferred vested benefits under the plan.
Both of these filings are due by the end of the 7th month following the end of the plan year; for calendar plan years this is July 31st. A plan may obtain a one-time extension of time to file a Form 5500 annual return/report as well as the Form 8955-SSA (up to 2½ months) by filing the IRS Form 5558, Application for Extension of Time To File Certain Employee Plan Returns, on or before the normal due date, thereby making the extended due date October 15th for calendar year plans.
As a plan sponsor or financial advisor, it is paramount that you maintain an open line of communication with your TPA or recordkeeper responsible for preparing this filing in order to avoid potential penalties and fines from both the IRS and the DOL. In order to avoid delays in the preparation and filing of the form, here are some things you can do as the plan sponsor to assist your service provider.
- Return your census and annual questionnaire to your TPA in a timely manner.
- Evaluate and amend your plan’s Fidelity bond requirements with your insurance provider and share any changes in coverage with your TPA.
- If you are a large plan requiring an audit, engage an independent auditing firm early in the year and schedule the audit to occur at least two months prior to the deadline or extended deadline to file the 5500.
- Make sure that you know your DOL assigned UserID and PIN number when the filing is ready to be signed and electronically submitted.
Form 5500 Administrative Penalties:
The IRS and DOL have concurrent jurisdiction regarding the filing of Form 5500. Therefore, each agency has the ability to assess its own penalties in connection with this requirement.
- The DOL may assess a penalty of up to $1,100 a day for each day a plan administrator fails or refuses to file a complete Form 5500.
- The IRS may assess a penalty of $25 a day (up to $15,000) for not filing Form 5500 by the due date.
- The IRS may assess a penalty of $1,000 for not filing an actuarial statement (Schedule MB or SB, as appropriate.
Form 8955-SSA Administrative Penalties:
- The IRS may impose a penalty for failure to file a Form 8955-SSA as it is considered to be a registration statement (including failure to include all required participants). The penalty is $1 for each participant not reported and for each day multiplied by the number of days the failure continues. The penalty, up to a maximum of $5,000, is imposed on the person failing to file.
- The Code requires that each plan administrator required to file a registration statement must, before the expiration of the time prescribed for the filing of the form, also furnish to each affected participant an individual statement setting forth the information required to be contained in the form. A penalty of $50 is imposed on the person required to furnish the statement to each affected participant for each willful failure to furnish the statement or a willful furnishing of a false statement.
- The IRS may also assess a penalty applicable to a failure to file a Form 8955-SSA as a required return or statement on the date and in the manner prescribed. This penalty is $25 per day for the period of the failure.
Failure to file your Forms 5500 or 8955-SSA in a timely manner can be costly if not handled properly. In general, the fines and penalties for a late Form 5500 and Form 8955-SSA can be mitigated at a reduced rate through a submission to the Delinquent Filers Voluntary Correction (DFVC) program . Legacy Retirement Solutions specializes in assisting plans who have failed to timely file their Form 5500 as well as Form 8955-SSA. Call us for assistance today.