EBSA Updates Delinquent Filer Voluntary Compliance Program

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

On January 28, 2013, the Employee Benefits Security Administration (EBSA), an agency of the U.S. Department of Labor (DOL), announced updates to its Delinquent Filer Voluntary Compliance (DFVC) Program.

Generally, if an administrator of an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), fails to file annual reports (i.e., Form 5500 or Form 5500-SF) for the plan on a timely basis, it can be subject to civil penalties. The DFVC Program is used by the DOL to encourage plan administrators to comply with annual reporting requirements in cases where the filings will be delinquent—by reducing penalty amounts (often a significant reduction when comparing the penalty amount for the late filing to the penalty amount for the DFVC filing) for delinquent Forms 5500.

The DFVC Program is generally available to a plan administrator if it complies with the program before it has been notified in writing by the DOL of a failure to timely file a Form 5500. Notably, the relief provided by the DFVC Program does not extend to any potential penalties assessed for annual reports that are, in the opinion of the DOL, incomplete or otherwise deficient.

The notice addresses changes to the DFVC Program since it was last updated in 2002, including:

  • Updates to the DFVC Program reflecting that all Forms 5500 must now be filed using the electronic ERISA Filing Acceptance System (EFAST2). In conjunction with mandatory electronic filing, the DOL created an electronic online payment option and an online calculator to help in determining applicable penalty amounts.
  • Specific requirements relating to the plan year forms and schedules that must be used in the delinquent filing. For delinquent filings related to plan years 2008 and earlier, or in cases where the filing is for a plan year more than three years prior to the most recent plan year forms available in EFAST2, plan administrators generally must file using the most current year EFAST2 form and schedules by entering the correct plan year dates in the appropriate place on the Form 5500 (but with PDF attachments of the correct year schedules—for certain schedules specified in the guidance). Where a delinquent filing is for a 2009 or later plan year, plan administrators must use the correct plan year form and schedules, unless the filing is for a plan year more than three years prior to the most recent plan year forms available in EFAST2.
  • In light of potential confusion relating to the rules described above, the guidance also includes a description of an online tool that will help plan administrators determine which versions of Form 5500 (or Form 5500-SF) and schedules to use when filing a delinquent annual report.
  • Clarification that Schedule SSA for the Form 5500, “Annual Registration Statement Identifying Separated Participants With Deferred Vest Benefits,” and Internal Revenue Service (IRS) Form 8955-SSA cannot be submitted through EFAST2. These schedules must be filed directly with the IRS.
  • An update in the policy on further non-substantive, technical changes. Going forward, the DFVC Program will not be formally amended through Federal Register notices for non-substantive, technical changes (e.g., deleting references to obsolete addresses for mailing penalty payments). Rather, the guidance states that the DFVC Program has been modified so that it is better integrated with the DFVC Program website that is used for such changes.
  • Comments that although the DFVC Program does not provide penalty relief under the Internal Revenue Code or Title IV of ERISA (which covers the insurance of defined benefit pension plans as administered by the Pension Benefit Guaranty Corporation [PBGC]), compliance with the DFVC Program requirements may provide certain penalty relief from the PBGC. Further, the IRS expects to issue separate guidance that will provide some penalty relief under the Code for delinquent Forms 5500 and Forms 5500-SF filed for plans where the conditions of the DFVC Program are met (and any further IRS requirements are satisfied).

The restatement of the DFVC Program pursuant to the guidance was immediately effective upon publication and supersedes and replaces the DFVC Program as published in the Federal Register on March 28, 2002.

Jason A. Rothman is a shareholder in the Cleveland office of Ogletree Deakins. Eric D. Penkert is an associate in the firm’s Greenville, South Carolina, office.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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