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In an effort to encourage pension and welfare plan
administrators to file overdue annual reports (commonly referred to as the
Form 5500), the Department of Labor’s Employee Benefits Security Administration (EBSA)
is providing plan administrators with the opportunity to
pay reduced civil penalties for voluntarily complying with the annual
reporting requirements.
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Plan administrators are eligible to pay reduced civil
penalties under the program if the required filings under the DFVC Program
are made prior to the date on which the administrator is notified in
writing by the Department of a failure to file a timely annual report
under Title I of the Employee Retirement Security Act of 1974 (ERISA).
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No. The relief under the DFVC Program is available only
to the extent that a Form 5500 is required to be filed under Title I of
ERISA. For example, Form 5500-EZ filers and Form 5500 filers for plans
without employees (as described in 29 CFR § 2510.3-3(b) and (c)) are not
eligible to participate in the DFVC Program because such plans are not
subject to Title I of ERISA. Plan administrators may call 202.693.8360 if
they have questions about whether the program applies to their filings.
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The following penalties may be assessed against plan
administrators:
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Late Filers -
Plan administrators filing a late
annual report (i.e., after the date the report was required to be
filed, including extensions) may be assessed $50 per day, with no
limit, for the period they failed to file, determined without regard
to any extensions for filing.
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Non-Filers -
Plan administrators who fail to file
an annual report may be assessed a penalty of $300 per day, up to
$30,000 per year, until a complete annual report is filed.
For example, assume an administrator for a plan with a
calendar plan year files the annual report for the 2001 plan year on
October 31, 2002, and does not participate in the DFVC Program. The
administrator would receive a written notice indicating the Department’s
intent to assess a penalty of $4,600 ($50 x 92 days delinquent). If there
are other annual reports that either have not been filed or have been
filed late, the plan administrator may be subject to the assessment of
additional penalties because the penalties are separately calculated for
each filing.
Pursuant to the Department’s regulations, upon
issuance by the Department of a notice of intent to assess a penalty, the
plan administrator may file a statement of reasonable cause why the
penalty, as calculated, should not be assessed. A showing of reasonable
cause must be in the form of a written statement setting forth all the
facts alleged as reasonable cause and must contain a declaration by the
administrator that the statement is made under penalty of perjury.
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Participation in the DFVC Program is a two part
process:
First, file a complete Form 5500 Annual
Return/Report, including all schedules and attachments, for each year
the plan administrator is requesting relief. This filing should be
sent to EBSA at the appropriate ERISA Filing Acceptance System (EFAST)
address listed in the instructions for the most current Form 5500
Annual Return/Report, or electronically in accordance with the EFAST
electronic filing requirements. The EFAST addresses in the 2001 Form
5500 instructions are as follows:
Paper:
Employee Benefits Security Administration
P.O. Box 7043
Lawrence, Kansas 66044-7043
Floppy Disc, CD-Rom or Tape:
Employee Benefits Security Administration
P.O. Box 7041
Lawrence, Kansas 66044-7041
Private Delivery Service:
EBSA/NCS
Attn: EFAST
3833 Greenway Drive
Lawrence, Kansas 66046-1290
Second, submit the following to:
DFVC Program
P.O. Box 530292
Atlanta, Georgia 30353-0292
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A paper copy of the completed Form 5500,
without schedules or attachments, for any filings using a 1999 or
later version of the Form (or a paper copy of the first page of
the Form 5500 or Form 5500-C, as applicable, for filings submitted
on pre-1999 versions of the Form).
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A check for the applicable penalty amount, made
payable to the U.S. Department of Labor.
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If the submission is for a small plan sponsored
by an Internal Revenue Code (Code) § 501(c)(3) organization
(including a Code section 403(b) small plan), the notation
501(c)(3) Plan must be in the upper-right corner of the
paper copy of the first page of the Form 5500 submitted to the
DFVC Program in Atlanta, Georgia. This notation should not be
included in the filing made with EBSA in Lawrence, Kansas.
It is recommended that all filings for a plan be
submitted to the DFVC Program in the same envelope or package in order to
ensure that those filings count towards the per-plan capped penalty
amount.
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The plan administrator shall file either:
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The most current Form 5500 Annual Return/Report
form issued (and, if necessary, indicate in the appropriate space on
the first page of the Form 5500 the plan year for which the annual
return/report is being filed)
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The Form 5500 Series Annual Return/Report form
issued for the plan year for which the relief is sought (but not a
Form 5500-R if the filing is for a 1998 plan year or a prior year)
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Small Plan Filers -
In the case of a plan with fewer than 100 participants at the beginning of
the plan year (hereinafter small plan), the applicable penalty
amount is $10 per day for each day the annual report is filed after the
date on which the annual report was due (without regard to any
extensions), not to exceed $750. In the case of a DFVC submission relating
to more than one delinquent annual report filing for the same plan, the
maximum penalty amount is $750 for each annual report, not to exceed
$1,500 per plan.
Note: The 80/120 participant rule described in 29
§ CFR 2520.103-1(d) is applicable in determining whether a plan is a
small or large plan.
Large Plan Filers -
In the case of a plan with 100 or more participants at the beginning of
the plan year and which is not eligible for the 80/120 participant
rule (hereinafter large plan), the applicable penalty amount is $10
per day for each day the annual report is filed after the date on which
the annual report was due (without regard to any extensions), not to
exceed $2,000. In the case of a DFVC submission relating to more than one
delinquent filing for the same plan, the maximum penalty amount is $2,000
for each annual report, not to exceed $4,000 per plan.
It is recommended that all filings for a plan be
submitted to the DFVC Program in the same envelope or package in order to
ensure that those filings count towards the per-plan capped penalty
amount.
Example 1 -
An administrator of a large plan with a
calendar year plan year files the annual report for the 2001 plan year on
August 6, 2002. The administrator failed to properly extend the filing due
date of July 31, 2002. Under the DFVC Program, the applicable penalty
amount would be $60 (6 days x $10).
Example 2 -
Assume the same facts as in Example 1,
except that the filer filed the annual report on March 31, 2003. Under the
DFVC Program, the applicable penalty amount is $2,000 (though the penalty
amount calculated at $10 per day would be $2,430 for 243 days, the
per-filing cap of $2000 applies).
Example 3 -
Assume the same facts as in Example 2,
except that the filer filed annual reports for the same plan for the 1999,
2000 and 2001 plan years on March 31, 2003. Under the DFVC Program, the
applicable penalty amount is $4,000, which is the per-plan filing
cap for large plans.
Example 4 -
Assume the same facts as in Example 3,
except that the filer is also submitting an additional plan year 2001
filing under the DFVC Program for another plan. Under the DFVC Program,
the penalty amount is $6,000 ($4,000 applicable to the three filings
discussed in Example 3, plus $2,000 for the Form 5500 filed for the other
plan).
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If, during the years of non-filing, there is at least
one year where the plan is a large plan, for purposes of the DFVC Program
the plan must use the large plan penalty amounts of $10 per day up to a
maximum of $2,000 per filing, not to exceed $4,000 per plan.
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Yes. In the case of a small plan sponsored by a Code
section 501(c)(3) organization (including a Code section 403(b) small
plan), the applicable penalty amount is $10 per day for each day the
annual report is filed after the date on which the annual report was due
(without regard to any extensions), not to exceed $750 regardless of the
number of delinquent annual reports for the plan submitted as part of the
same DFVC submission.
This per-plan penalty cap, however, will not be
available if, as of the date the plan files under the DFVC Program, there
is a delinquent or late annual report due for a plan year during which the
plan was a large plan.
Small plan filings that are eligible for this special
per-plan penalty cap must bear the notation 501(c)(3) Plan in
the upper-right corner of the first page of the Form 5500 that is
submitted to the DFVC Program in Atlanta, Georgia. This notation should
not be included in the filing made with EBSA in Lawrence, Kansas.
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No. All penalties under the DFVC Program are calculated
at $10 per day, beginning on the day after the date the filing was due,
without regard to any extensions.
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Yes. Payment of the penalty amount under the terms of
the DFVC Program constitutes, with regard to the filings submitted under
the Program, a waiver of the right both to receive notice of the
assessment from the Department and to contest the Department’s
assessment of the DFVC Program penalty amount.
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Annual reports that are filed under the DFVC Program
are subject to the usual edit checks. Plan administrators will have an
opportunity to correct deficiencies in accordance with the procedures
described in 29 CFR § 2560.502c-2. The failure to correct deficiencies in
accordance with these procedures may result in the assessment of further
deficient filer penalties.
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No. The plan administrator is personally liable for the
payment of civil penalties assessed under ERISA § 502(c)(2). Therefore,
civil penalties, including penalties paid under the DFVC Program, may not
be paid from the assets of an employee benefit plan.
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Yes. Administrators of apprenticeship and training
plans and administrators of pension plans for a select group of management
or highly compensated employees (top hat plans), may file the
applicable notice and statement described in regulation §§ 2520.104-22
and 2520.104-23, respectively, under the DFVC Program in lieu of filing
any past due annual reports. By properly filing these statements and
meeting the other applicable DFVC Program requirements, administrators
will be considered as having elected compliance with the exemption and/or
alternative method of compliance prescribed in §§ 2520.104-22, or
2520.104-23, as appropriate, for all subsequent plan years.
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The plan administrator must prepare the statement
described in regulation section 29 CFR §2520.104-22 and file it at the
following address:
U.S. Department of Labor
Employee Benefits Security Administration
Apprenticeship and Training Plan Exemption
200 Constitution Avenue, NW, Suite N-1513
Washington, DC 20210
The plan administrator must also complete the most
current Form 5500 Annual Return/Report (without schedules or attachments),
items 1a–1b, 2a–2c, 3a–3c, and use plan number 999 for all
apprenticeship and training plans. The paper copy of the form must be
signed and dated, and be accompanied by a check for $750 made payable to
the U.S. Department of Labor, and sent to:
DFVC Program
Employee Benefits Security Administration
P.O. Box 530292
Atlanta, Georgia 30353-0292
The applicable $750 penalty amount is for each DFVC
submission, without regard to the number of plans maintained by the same
plan sponsor for which the notices and statements are being filed or the
number of participants covered by the plan or plans.
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The plan administrator must prepare the statement
described in regulation section 29 CFR § 2520.104-23 and file it at the
following address:
U.S. Department of Labor
Employee Benefits Security Administration
Top Hat Plan Exemption
200 Constitution Avenue, NW, Suite N-1513
Washington, DC 20210
Note: A plan sponsor maintaining more than one top hat plan is not required to file a separate statement for each such
plan. See 29 CFR § 2520.104-23.
The plan administrator must also complete the most
current Form 5500 Annual Return/Report (without schedules or attachments),
items 1a–1b, 2a–2c, 3a–3c, and use plan number 888 for all top hat plans. The paper copy of the form must be signed and dated, and be
accompanied by a check for $750 made payable to the U.S. Department of
Labor, and sent to:
DFVC Program
Employee Benefits Security Administration
P.O. Box 530292
Atlanta, Georgia 30353-0292
The applicable $750 penalty amount is for each DFVC
submission, without regard to the number of plans maintained by the same
plan sponsor for which the notices and statements are being filed or the
number of participants covered by the plan or plans.
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No. Unlike the 1995 DFVC Program, the forms and penalty
payment no longer have to be annotated in bold red print identifying the
filing as a DFVC filing. In fact, notations inserted in the margins or
borders of 1999 or later year Form5500s may adversely affect the
processing of the form and require a substitute filing. Filers using the
2001 or subsequent version of the Form 5500 to participate in the DFVC
Program should check box D of the Form 5500 and attach the required
statement to the Form 5500 filed with EFAST (see the Form 5500
instructions).
Filers of Forms 5500 under the DFVC Program for small
plans sponsored by 501(c)(3) organizations (including Code section 403(b)
plans) must make the notation 501(c)(3) Plan in the upper right-hand
corner of the first page of the Form 5500 that is being submitted to the
DFVC Program in Atlanta, Georgia. The notation is not required to be in
red ink.
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A plan administrator is required to file an annual
report for an employee benefit plan beginning with the 1975 plan year.
However, during the DFVC Program, the Department is targeting all plan
years beginning on or after January 1, 1988 -- the effective date of ERISA
§ 502(c)(2).
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The DFVC Program is not applicable to DFE filings made
for master trusts, pooled separate accounts, common/collective trusts and
103-12 IEs. The Form 5500 filed by these DFEs is an integral part of the
annual report of the participating employee benefit plans. If a Form 5500
was timely filed for the participating employee benefit plans, a failure
to timely file a DFE Form 5500 for these entities may cause the plan’s
annual report to be incomplete or inaccurate, but it does not result in
the plan being a late or non-filer. The plan’s Form 5500, however, may
be subject to rejection for being incomplete or inaccurate, and, if
rejected, a plan administrator who failed to correct the problem would be
subject to penalty assessments by the Department.
A Form 5500 filed for a group insurance arrangement (GIA)
under the Department’s regulations relieves the plan administrators of
the individual plans participating in the GIA from the requirement to file
a separate Form 5500 for each plan. The Department will allow a GIA that
failed to file a GIA Form 5500 on time to use the DFVC Program to correct
the late filing. GIAs participating in the DFVC Program are subject to the
conditions applicable to large plan filers.
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No. By filing under the prior DFVC Program, the plan
administrator paid the reduced penalties and received the relief with
respect to which the paid penalty related. The primary protection the plan
administrator received was, and continues to be, relief from possible
assessment of higher late filer or non-filer penalties. While the DFVC
penalty amounts have changed, the plan administrator continues to have the
relief that was originally provided under the DFVC Program.
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No. The DFVC Program is only available to a plan
administrator that complies with the requirements of the Program before
the date on which the administrator is notified in writing by the
Department of a failure to file a timely annual report under Title I of
ERISA.
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No. Payment of a penalty under the terms of the DFVC
Program constitutes a waiver of an administrator’s right both to receive
a notice of assessment from the Department and to contest the
Department’s assessment of the penalty amount. If the plan administrator
chooses not to waive these rights, the plan administrator must file with
EFAST in Lawrence, Kansas in the regular manner and not pursuant to the
DFVC Program.
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Both the IRS and PBGC have agreed to provide certain
penalty relief under the Code and Title IV of ERISA for delinquent Form
5500s filed for Title I plans where the conditions of the DFVC Program
have been satisfied. See sections 5.02 and 5.03 of the DFVC Program
Federal Register Notice and IRS Notice 2002-23.
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Forms may be obtained from the IRS by calling
1.800.TAX-FORM (1.800.829.3676). Forms for certain pre-1999 plan years are
also available through the Internet sites for EBSA and the IRS. For
further information on EFAST filing requirements, see the EFAST
Web site and the instructions for the most current Form 5500.
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For further information concerning the DFVC Program,
call EBSA's Toll-Free Employee & Employer Hotline number, 1.866.444.EBSA (3272).
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