DFVCP (Delinquent Filer Voluntary Compliance Program) explained

The DFVCP stands for the Delinquent Filer Voluntary Compliance Program. It is a program offered by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) that allows plan administrators of employee benefit plans to voluntarily file delinquent annual reports and pay reduced penalties for late filing. The DFVCP encourages pension and welfare plan administrators to file overdue annual reports (Form 5500) by allowing them to pay reduced civil penalties when voluntarily complying.

In 2022, over 22,000 companies filed under DFVCP. At ERISAPros, we help hundreds of companies annually with their DFVCP filings with our highly experienced team members and offer 12 months of unconditional support.

What is DFVCP?

Since its adoption on April 27, 1995, the program has enabled employers to choose to participate on a voluntary basis and pay a reduced penalty for filing their employee benefit plan reports late.

Which companies need DFVCP?

Employers sponsoring Welfare Benefit Plans that have over 100 lives need to file Form 5500. A plan administrator that fails to file an ERISA plan Form 5500 is required to file a DFVCP.

How to avoid penalties?

The penalty for failure to file can reach as high as $2,194 per day. However, if an employer voluntarily corrects their delinquent filing, the penalty is a more modest $10 per day per plan for each day the filing is overdue.

What is DFVCP?

Under the Employee Retirement Income Security Act (ERISA), plan administrators must file annual reports for employee benefit plans to disclose information about the plan’s financial condition and operations. Failure to file these annual reports can result in penalties and enforcement action by the EBSA.

The DFVCP provides a way for plan administrators to comply with the reporting requirements by voluntarily filing delinquent annual reports and paying reduced penalties. The program is available to plan administrators who are delinquent in filing an annual report for a plan year more than one year past the due date.

By participating in the DFVCP, plan administrators can avoid potentially higher penalties and enforcement actions that could result from a failure to file the required annual reports. The program also provides a way for plan administrators to maintain compliance with the reporting requirements under ERISA and to continue to provide vital information to plan participants and beneficiaries.

Which companies need DFVCP?

Often, employers are unclear or unaware of the general requirements to file a Form 5500 for their Health and Welfare Benefit Plans. However, plan administrators can typically find themselves in a delinquent situation due to systemic growth, changes in management, mergers & acquisitions, and control group issues.

For Non-Trust Plans:

  • 100 or more enrolled employees in the plan on the first day of the plan year.

For Trust Plans and MEWAs:

  • The participant count is not a determining factor. A filing is required.

Some other factors that can lead to delinquency, such as:

  • Systemic growth
  • Changes in management
  • Changes in the administration of benefits offered to participants
  • Mergers & Acquisitions
  • Accidental establishment of Trusts
  • Control group issues

How to avoid penalties?

To avoid penalties under the Delinquent Filer Voluntary Compliance Program (DFVCP), it’s essential to ensure that you file annual reports for your employee benefit plan on time. Here are some tips to help you avoid DFVCP penalties:

  1. Know your filing requirements: Make sure you understand the filing requirements for your employee benefit plan under the Employee Retirement Income Security Act (ERISA). This includes understanding the due date for your annual report, which can vary depending on the type of plan you have and the plan’s size.
  2. Keep accurate records: Maintain accurate records of plan transactions and financial information to ensure that you can easily compile the information needed to file your annual report.
  3. Be aware of changes in the law: Stay up to date on changes in the law that may impact your filing requirements. This includes changes to ERISA reporting requirements or changes in the regulations governing your plan.
  4. Work with experienced professionals: Consider working with experienced professionals, such as an accountant or attorney, to help ensure that your annual report is accurate and complete. They can also help you navigate any changes in the law or regulations that may impact your filing requirements.

By following these tips and taking proactive steps to stay on top of your annual reporting requirements, you can avoid the need to participate in the DFVCP and the associated penalties.

Here are the penalty amounts below:

Penalty Amounts for Large Plans

  • Daily penalty amount: $10
  • Per Plan maximum penalty for one-year late filing: $2,000
  • Capped per Plan penalty for multiple year late filings (same Plan number): $4,000

(IRS waives its penalties when the Plan Administrator uses the DFVC program)

If the DFVC Program is not utilized, the following penalties may be assessed if discovered by the Department of Labor:

  • For Non-Filers: A penalty of $300 per day, up to $30,000 per year, may be assessed on a plan administrator until a complete Form 5500 is filed.
  • For Late-Filers: A penalty of $50 per day, for each day an annual report is filed after the date on which the annual report was required to be filed, without regard to any extensions of time for filing.

(The Employee Benefits Security Administration (EBSA) has maintained a program for the assessment of civil penalties (Under 29 CFR 2560.502c-2 and 29 CFR 2570.60 et seq.)

Frequently asked questions about DFVCP

The Delinquent Filer Voluntary Compliance Program (DFVCP) is available to plan administrators of employee benefit plans who are delinquent in filing an annual report for a plan year more than one year past the due date.

The program is available to administrators of all types of employee benefit plans, including pension plans, 401(k) plans, health and welfare plans, and other types of employee benefit plans subject to reporting requirements under the Employee Retirement Income Security Act (ERISA).

To be eligible for the DFVCP, plan administrators must voluntarily file delinquent annual reports and pay the applicable reduced penalty. The program is designed to encourage voluntary compliance with the reporting requirements under ERISA and to provide a way for plan administrators to come into compliance with reduced penalties.

Plan administrators that are currently under investigation by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) are generally not eligible for the DFVCP. Additionally, the DFVCP may not be available to plan administrators who have previously participated in the program and failed to file timely annual reports in subsequent years.

As a general rule, if you are an administrator of an employee benefit plan, you may be required to file an annual report with the Department of Labor. The requirement to file an annual report is generally based on the type and size of the plan.

For example, if you are the administrator of a pension plan or a 401(k) plan, you are generally required to file an annual report on Form 5500 with the Department of Labor, unless an exemption applies. The specific requirements for filing depend on the type and size of the plan, and can vary depending on factors such as the number of participants, the assets of the plan, and whether the plan is fully insured or self-insured.

If you are unsure whether you are required to file an annual report for your plan, please contact us and we can help you determine your filing obligations.

As for how many plans you need to file for, that depends on how many employee benefit plans you administer. If you are the administrator of multiple plans, you may need to file an annual report for each plan. However, the filing requirements for each plan may be different, so it is essential to review the specific requirements for each plan.

Let’s assume you participate in the Delinquent Filer Voluntary Compliance Program (DFVCP). In that case, you generally need to file any delinquent annual reports for each plan you have been the administrator for the past seven plan years. This means that if you have failed to file an annual report for a plan, you should file all delinquent annual reports for that plan going back to the seventh plan year before the current plan year.

For example, if the current plan year is 2022, you would need to file any delinquent annual reports for the plan going back to 2015 (seven plan years before the current plan year).

It’s important to note that the seven-year filing requirement applies to all annual reports that must be filed, not just those for which you participate in the DFVCP. If you have any outstanding annual reports for a plan, it’s essential to file them as soon as possible to avoid potential penalties or other enforcement actions.

If you are a plan administrator and fail to file an annual report for your employee benefit plan, you may be subject to penalties under the Employee Retirement Income Security Act (ERISA). The specific penalty amounts for failing to file an annual report vary based on the number of days that the annual report is delinquent, the size of the plan, and the number of participants in the plan.

Under the Delinquent Filer Voluntary Compliance Program (DFVCP), the penalty amounts are generally lower than if you are subject to enforcement actions outside the DFVCP. The DFVCP provides a reduced penalty structure for eligible filers who voluntarily come forward to correct their delinquent filings. The penalty amount for the DFVCP is based on the size of the plan and the number of years the filing is delinquent and generally ranges from $10 per day per plan for small plans to $750 per day per plan for large plans.

The penalty amount is calculated by multiplying the days the filing is delinquent by the applicable daily penalty rate for the plan. The total penalty amount cannot exceed 20% of the plan assets, as determined at the end of the plan year for which the annual report is required.

It’s important to note that the penalty structure for the DFVCP may change over time, so it’s important to check the most current guidance from the Department of Labor’s Employee Benefits Security Administration (EBSA) for the latest information on penalty amounts and other requirements for the program.

If participating in the Delinquent Filer Voluntary Compliance Program (DFVCP), you can pay the penalty for late filing through the Department of Labor’s (DOL) Pay.gov website. The DOL will send you a payment letter outlining the penalty amount due and providing instructions for submitting payment.

To pay the penalty online, you will require to go to the Pay.gov website and follow the instructions to enter the payment amount and other required information. You can pay using a bank account or credit card. If you prefer to pay by mail, you can follow the instructions provided in the payment letter to submit payment by check or money order.

It’s important to note that payment of the penalty does not relieve you of the obligation to file the delinquent annual report. You must still file the annual report as part of the DFVCP process to come into compliance with the reporting requirements. The penalty payment is a separate requirement and must be paid in addition to filing the delinquent annual report.

Under the Delinquent Filer Voluntary Compliance Program (DFVCP), the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) can waive or reduce the applicable penalty for reasonable cause. If you believe there is a reasonable cause why the penalty should not be assessed, you can provide a written explanation of the facts and circumstances to the EBSA and request a waiver or reduction of the penalty.

The EBSA will consider the facts and circumstances surrounding your failure to file the annual report and determine whether a waiver or reduction of the penalty is appropriate. In making this determination, the EBSA will consider factors such as whether the failure to file was due to circumstances beyond your control, whether you acted in good faith, and whether you have taken steps to prevent future failures to file.

It’s important to note that obtaining a waiver or reduction of the penalty is not guaranteed and is subject to the discretion of the EBSA. Suppose you believe you have a reasonable cause for the failure to file. In that case, it’s crucial to provide a detailed and thorough explanation of the facts and circumstances, along with any supporting documentation, to increase the likelihood that the EBSA will grant the waiver or reduction request.

To file a delinquent annual report for your employee benefit plan under the Delinquent Filer Voluntary Compliance Program (DFVCP), you will need to obtain all of the necessary documents to complete the filing. The specific documents you will need will depend on the type of plan you have and the requirements of the annual report.

The annual report for most employee benefit plans is Form 5500, a series of forms that report information about the plan’s operations, investments, and financial condition. To complete Form 5500, you will typically need to gather information about the plan’s participants, including their names, social security numbers, and account balances, as well as information about the plan’s investments, expenses, and funding.

You can obtain the necessary documents and information from various sources, including the plan’s record keeper, investment advisors, and other service providers. You may also need to consult with your plan’s legal counsel or accountant to ensure that you provide accurate and complete information on the annual report.

If you are unsure about the specific documents you need or where to obtain them, you can consult with the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) or a qualified professional with expertise in employee benefit plan compliance, such as ERISAPros. The EBSA offers a variety of resources and guidance on its website to help plan administrators understand their responsibilities and requirements under ERISA.

To submit your delinquent annual report under the Delinquent Filer Voluntary Compliance Program (DFVCP), you will need to file the necessary forms and attachments electronically using the EFAST2 system. The EFAST2 system is a web-based filing system designed to simplify filing annual reports for employee benefit plans.

Once you have completed the necessary forms and attachments, you can submit them electronically through the EFAST2 system. You will need to pay the applicable penalty for late filing at the same time that you file the annual report.

After you have filed the annual report and paid the applicable penalty, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) will review your submission to ensure that it is complete and accurate. If the EBSA identifies any errors or omissions in your submission, they will contact you to request additional information or clarification.

Once the EBSA has reviewed and accepted your submission, you will be considered to comply with the reporting requirements under the DFVCP. However, it’s important to note that payment of the penalty and submission of the annual report does not relieve you of the obligation to file annual reports for plan years promptly. It’s essential to continue to file annual reports on time to avoid further penalties or enforcement action by the EBSA.

No. The statute of limitations only begins to run upon filing a Form 5500.

We help hundreds of companies with their DFVCP needs every year. Contact us and learn how we can help you avoid penalties.

We also offer consultative services.

If you or your client require customization and have different and complicated Benefit Plan designs, our consultants who have Juris Doctor’s can put your mind at ease.



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