With limited exceptions, the Employee Retirement Income Security Act (“ERISA”) requires plan sponsors to file a Form 5500 report for welfare and retirement plans on an annual basis. Should a plan sponsor fail to file an annual report, the plan sponsor is subject to civil penalties enforced by the Department of Labor (“DOL”). To encourage plan sponsors to file past due annual reports, the DOL administers the Delinquent Filer Voluntary Compliance Program (“DFVCP”) which permits plan sponsors to avoid potentially higher civil penalty assessments by satisfying the DFCVP requirements and voluntarily paying a reduced penalty amount.
Recently, the DOL announced two web-based options that make participating in the DFVCP easier by (1) providing an online penalty calculator to help plan sponsors accurately calculate the payment needed to participate in the DFVCP and (2) allowing payment of the penalty fee over the internet.
The new calculator is designed to calculate the penalty for each plan year submitted under the DFVCP. After answering some questions and inputting basic plan information (plan year end date, participant count, and mailing date) in the required fields, the calculator determines the amount owed for each individual plan. The calculator then provides the final amount due if multiple filings are being made under the DFVCP. This calculated penalty amount can then be paid online.
To encourage plan sponsors to file all past due annual reports, the DOL limits the maximum penalty fee. For small plans (generally, fewer than 100 participants at the beginning of the plan year), the penalty is capped at $1,500 per submission. For large plans (generally, 100 or more participants at the beginning of the plan year), the penalty is capped at $4,000 per submission.