Tax

Penalty Relief Deadline Approaching for Failure to File Retirement Plan Documents

May 2015

Amnesty is still available for certain retirement plans that fail to file the required IRS Form 5500 series return—but the deadline to file past-due forms is quickly approaching.

Failure to file a required Form 5500 series return for a retirement plan results in a $25 per-day penalty, up to a maximum of $15,000 per late return; an additional penalty of $1,000 applies to each late-filed actuarial report, if required. However, an amnesty program created under Rev. Proc. 2014-32 grants automatic late-filing penalty relief to small businesses that file certain past-due retirement plan forms with the IRS by June 2, 2015. 

Eligible retirement plans include those covering only a 100 percent business owner and his or her spouse. For a partnership, the plan may cover one or more partners and their spouses (no common law employee participants). Plans maintained outside the U.S. primarily for nonresident aliens (foreign plans) also are eligible for relief. Businesses that have already received a penalty assessment for the delinquent return do not qualify for relief under this program. 

According to IRS guidance, eligible plan sponsors or administrators must follow these steps to obtain automatic penalty relief:

  1. File the late return, plus any required schedules and attachments, using the original IRS form for that year. Form 5500-EZ must be used for 2009 and later years, even if the plan could have originally submitted a Form 5500-SF. Annual actuarial reports for defined benefit plans need to be prepared even if they are not required to be included with the filed return.
  2. Write “Delinquent return submitted under Rev. Proc. 2014-32, Eligible for Penalty Relief” in red letters on the first page above the title of the form on each late return that you submit. Failure to do so may cause your late return to be ineligible for penalty relief.
  3. Attach a completed one-page transmittal schedule to the front of each late return.
  4. Mail the returns no later than June 2, 2015, to the address included in Rev. Proc. 2014-32.

Plans ineligible for late-filing relief under this program may instead pursue penalty relief through the Department of Labor’s Delinquent Filer Voluntary Compliance Program.

If you have questions or need assistance bringing your organization into compliance, contact your BKD advisor.

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