Both the Department of Labor ("DOL") and the Internal Revenue Service ("IRS") can assess significant penalties if annual reports are not timely filed for certain retirement and health and welfare plans. However, years ago the DOL instituted a program that allowed plan sponsors to avoid these penalties in exchange for payment of a predetermined fee if the delinquent reports were filed under its Delinquent Filer Voluntary Compliance ("DFVC") Program. However, a trap for the unwary arose when the DOL expanded its electronic filing system.
Sponsors of most employee benefit plans must file an annual report in order to comply with the requirements of the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code ("Code"). (Please note that there are exceptions to this filing requirement that are beyond the scope of this article.) Historically, Form 5500 was utilized to comply with the annual reporting requirements of both ERISA and the Code, and it was filed in hard-copy form with the IRS, who then passed the information along to the DOL. But beginning in 2009, plan sponsors were required to file Form 5500 electronically using the DOL's ERISA Filing Acceptance System, referred to as "EFAST2". And beginning in 2013, the DOL required that DFVC applications be made via its EFAST2 system as well.
The trap arose because, in addition to the information that is required to be filed with the DOL, certain information regarding terminated participants in a retirement plan must be filed with the IRS. Historically, this information was included in the Form 5500 filing package on Form SSA. However, when the DOL switched to its EFAST2 system in 2009, this form was removed from the Form 5500 package, and the related information was instead required to be submitted directly to the IRS on a stand-alone form (Form 8955-SSA). See Announcement 2011-21. This resulted in confusion as to how to report this information under the DFVC program, since DFVC applications can, and often do, relate to years prior to 2009. This confusion was compounded in 2013 when the DOL required DFVC applications to be filed through EFAST2.
The IRS has announced a temporary "amnesty" program for DFVC filers who fell into this trap and did not properly file Form 8955-SSA with the IRS.1 Under this program, the IRS will not assess penalties for the late filing of Form 8955-SSA in connection with a DFVC filing if a hard copy of the form is submitted to the IRS by December 1, 2014. On an ongoing basis, this form must be filed with the IRS no later than 30 days after the filer completes the DFVC filing. See Revenue Procedure 2014-35.
What Should Employers Do?
If a filing has been made under the DFVC program since 2009, you should confirm that the related Form(s) 8955-SSA was filed with the IRS. If not, this form should be filed with the IRS by December 1, 2014. On an ongoing basis, this form should be filed with the IRS no later than 30 days after the DFVC application is filed with the DOL.
1 This relief is not available for Form 5500 series filers that are not coved under Title I of ERISA, which generally includes plans that do not provide benefits for anyone except the owner, the owner's spouse and/or one or more partners and their spouses and certain foreign plans. However, for these plans, the IRS has announced a special pilot penalty relief program that will only be available until June 2, 2015. No payment is required to file under this program. See Revenue Procedure 2014-32.