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  • BS - Rachel Byers

    By Rachel Byers, Full-Time Faculty, School of Business 
    Published November 2014

    Both the Internal Revenue Code and Title I of the Employee Retirement Income Security Act of 1974 require reports to be filed for certain small business retirement plans. The Form 5500 Series, which includes the Form 5500 (Annual Return/Report of Employee Benefit Plan), the Form 5500-SF (short form 5500), and the Form 5500-EZ (Annual Return of One-Participant Retirement Plan), meets the IRS and Department of Labor’s necessary reporting requirements.

    Penalties for not filing an annual Form 5500 series report may be subject to penalties of $25 per day up to $15,000 per return. However, beginning in June 2014, the IRS started a 1-year pilot program (Revenue Procedure 2014-32) that provides penalty relief to certain plan administrators and plan sponsors who failed to timely file the Form.

    In order to receive penalty relief, the plan administrator/sponsor must submit a completed Form 5500 for each plan year for which they are seeking penalty relief under the Revenue Procedure. In the top margin of the return, in red letters, the following phrase should be written: “Delinquent return submitted under Rev. Proc. 2014-32, Eligible for Penalty Relief.” Delinquent Forms 5500-EZ should be mailed to the IRS at 1973 North Rulon White Blvd., Ogden, UT 84404-0020. Forms 5500 should be mailed to the IRS (Attn: Employee Plans Delinquent Filer Program EP Classification) at 9350 Flair Dr., El Monte, CA 91731-2828.  For additional information, visit http://www.irs.gov/Retirement-Plans/New-Penalty-Relief-Program-for-Form-5500-EZ-Late-Filers 

    It should be noted, however, that if a plan administrator previously filed a late Form 5500 and has been assessed penalties, the Revenue Procedure does not provide relief of those penalties. So, plan administrators would have been better off not filing the late returns. Is this fair? No. Therefore, if you are one of the administrators this applies to, I encourage you to request abatement of the penalty for this very reason.

     

     

    Rachel Byers is a full-time faculty member at Kaplan University. The views expressed in this article are solely those of the author and do not represent the view of Kaplan University.

    The contents of this article are presented for informational purposes only and are not to be relied upon for financial planning, insurance, or tax-related services. Always check with a professional regarding any questions you may have regarding these services.

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