Welfare Benefit Plan ERISA News
February 2012

 
One More Advantage of a Wrap SPD
The IRS has issued a reminder that Form 5558 can only be used for up to three plans. Filers of Form 5500s can apply for a one-time filing extension by filing Form 5558. If an employer maintains more than one single employer plan and the plan years end on the same date, the IRS generally allows an employer to file a single Form 5558 to apply for extensions to file Form 5500s. However, the IRS has stated they will not process Form 5558s requesting extensions for more than three plans.
Form 5500 Nonfilers - Be Prepared for an Audit!
The October 12, 2011 issue of the IRS's Employee Plans News (a periodic IRS newsletter) notes that the IRS's Employee Plans Compliance Unit (EPCU) has begun a Form 5500 nonfiler project to promote compliance with Form 5500 filing requirements. According to the newsletter, the EPCU will be sending compliance check letters to plan sponsors for whom they have no record of a Form 5500 or 5500-SF filing with the DOL (or Form 5500-EZ with the IRS) six to nine months after the return's due date. Plan sponsors will be asked to either file the return or explain why they did not file. Plan sponsors who have filed Form 5500s may still receive compliance check letters in some cases where the plan sponsor's Form 5500 information did not match IRS records (in which case, the IRS will simply update its records). In addition to the compliance letter, a failure to file a required return by a plan sponsor will result in the IRS sending a delinquency notice or notices (CP 403 Notice and CP 406 Notice) which will require a response from the sponsor.
Plan sponsors should be aware that the Internal Revenue Code imposes a penalty of $25 a day (up to $15,000) for not filing their Form 5500 return by the required due date. In addition, the DOL may impose civil penalties for the late filing of the same Form 5500 of up to $1,100 per day. The IRS notes that the DOL's Delinquent Filer Voluntary Compliance Program (DFVCP) may be utilized by many plan sponsors who have not filed their Form 5500 by the required due date to substantially reduce DOL penalties and eliminate the IRS penalty under the DFVC Program.*
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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.

 

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