ACA late filing services- Know about the penalties for not filing Form 5500 on time

The Form 5500, Annual Return/Report of Employee Benefit Plan to be filed with the Department of Labor (DOL), is used to know about the company’s employee benefit plans. The Form contains information such as the investments, financial conditions, operations, and conditions of the plan. Any administrator or sponsor of an employee benefit plan who fails to inform the DOL about each benefit plan every year before the due date will be liable to pay a penalty imposed by the DOL.

Read on to know the DOL penalty for late filing Form 5500 and how ACA Compliance Solutions Services, Inc. can help you in preparing for all the ACA late filing services.

The Maximum Penalty

Currently, the DOL can impose a maximum penalty of $2,140 per day after the due date on which Form 5500 should have been filed (which is seven months after the finish of the plan year except if an application for extension is filed by that date). Initially, the penalty was only $1,100 per day, but it changed after July 2016. The 2015 Inflation Adjustment Act required government organizations to change their penalty sums for inflation, an underlying "make up for lost time" adjustment in 2016 and yearly from thereon.

This is the penalty that applies per Form 5500. If an employer has sponsored only one plan but fails to file the report for Form 5500 by 365 days, the maximum penalty the DOL could impose would be $781,100 (365 x $2,140). For instance, if the employer has enrolled in two plans, but failed to pay the tax in time, then the most extreme penalty or fine for late filing both of the plans for a year or 365 days late would be $1,562,200 (2 x $781,100). Also, If the employer has enrolled in just one plan but filed later after five years, the highest penalty or fine could add up to a faltering $3,907,640! (5 x $7781,100 and an extra $2,140 for one February 29th).

Most of the time, the DOL doesn’t actually impose the maximum penalty on the employer. However, if the employer fails to provide evidence of a willful attempt to evade or circumvent DOL rules, the employer will be liable to the maximum penalty.

The Standard Penalty

For Form 5500 Non-filers, the DOL has fixed a standard penalty of $300 per day up to $30,000 per year, and for late filers, it is $50 per day with no cap on the upper limit (this equates to $18,250 per year, or 365 x $50).

According to DOL, a non-filer is defined as “an individual or corporation who is required to file an annual report for the selected plan but has never filed a report” (until the DOL sends a inquire in written about the filing). Historically, most of the non-filers were references from either the Office of Enforcement or the IRS. The DOL has also defined “stop-filer,” as an individual who has filed a plan in the past but didn't do so in the current year.

A late-filer does not file the report before the due date but files it, usually before receiving a notice from the DOL. The DOL later imposes a late-filing penalty on the individual. Moreover, when the DOL sends a written notice to a plan administrator who filed a Form 5558 (Application for Extension) and then does not file the Form 5500 within the allowed timeframe, is liable to a late-filer penalty from the DOL. 

How can ACACSS help?

ACA Compliance Solutions Services, Inc. can help you effectively prepare to file Form 5500 while navigating the complex requirements of DOL for employers to meet deadlines and save them from the hefty penalties. We provide complete ACA late filing solutions ensuring guaranteed compliance to help you avoid unnecessary penalties. For more information, contact us today!