Source: http://www.financialbrowsers.com/articles/DFVC-FAQ.htm
Timestamp: 2019-04-24 18:42:07+00:00

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What is the Delinquent Filer Voluntary Compliance Program (DFVC)?
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.
Who is eligible to participate in the DFVC Program?
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).
Is participation under the DFVC Program available to all Form 5500 Series filers?
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.
Which version of the Form 5500 should be filed?
What civil penalties may be assessed by the Department against plan administrators who fail to file a timely annual report and who do not participate in the DFVC Program?
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.
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.
How does a plan administrator file a delinquent Form 5500 under the DFVC Program?
First – file a complete Form 5500 Annual Return/Report, including all schedules and attachments, for each year the plan administrator is requesting relief.
Mark Box D – “If filing under an extension of time or the DFVC Program, check box and attach required information.” and attach a statement that the report is being submitted under the DFVC Program with “Form 5500, BOX D- DFVC Filing” prominently displayed at the top of the statement.
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 described below.
What is the applicable penalty amount?
Small Plan Filers - 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 - 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 2004 plan year on August 6, 2005. The administrator failed to properly extend the filing due date of July 31, 2005. 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, 2006. 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 $2,000 applies).
Example 3 - Assume the same facts as in Example 2, except that the filer filed annual reports for the same plan for the 2001, 2002, and 2003 plan years on March 31, 2005. 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 2004 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).
Who should the check be made to?
The penalty check should be made payable to the Department of Labor.
A plan administrator for a plan is delinquent on Form 5500 filings for multiple years. If during that period, the plan’s classification has shifted between being a large and small plan, which penalty cap applies to the plan’s DFVC Program submission?
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.
Is there a different per-plan penalty cap that applies to administrators of small plans sponsored by Internal Revenue Code (Code) section 501(c)(3) organizations (including Code section 403(b) small plans)?
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.
Are extensions considered when calculating penalties under the DFVC Program?
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.
May plans participate in the DFVC program if they have already received correspondence from the Department of Labor or the Internal Revenue Service?
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 Labor of a failure to file a timely annual report under Title I of the Employee Retirement Security Act of 1974 (ERISA).
IRS late-filer penalty letters will not disqualify a plan from participating in the DFVC Program.
A Department of Labor Notice of Intent to Assess a Penalty will always disqualify a plan.
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.
Annual reports that are filed under the DFVC Program are subject to the usual edit checks and other enforcement reviews. Plan administrators generally 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.
Can plan assets be used to pay the civil penalties assessed under ERISA § 502(c)(2)?
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.
May an administrator of an apprenticeship and training plan, as described in 29 CFR § 2520.104-22, or an administrator of a top hat plan, as described in 29 CFR § 2520.104-23, participate in the DFVC Program?
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.
How does an administrator of an Apprenticeship & Training Plan participate in the DFVC Program?
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.
How does an administrator of a Top-Hat Plan participate in the DFVC Program?
Note: If a plan sponsor has more than one top hat plan that is participating in the DVFC program at the same time, a single statement covering all of the plans may be filed consistent with the general requirements for top hat plan filings under 29 CFR § 2520.104-23.
Does the DFVC Program only apply to plan years beginning on or after January 1, 1988?
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).
Is the DFVC Program applicable to filings made by direct filing entities (DFEs) (i.e., master trusts, pooled separate accounts, common/collective trusts, 103-12 IEs, and group insurance arrangements)?
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.
Is it possible to obtain a waiver from the applicable penalty amount under the DFVC Program if the plan administrator can demonstrate that there is reasonable cause why the penalty should not be assessed?
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.
Does participation in the DFVC Program protect the plan administrator from other civil penalties that may be assessed by the Internal Revenue Service (IRS) or the Pension Benefit Guaranty Corporation (PBGC) for failing to timely file a Form 5500 Annual Return/Report?
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.
How can a plan administrator obtain Form 5500 Series forms?
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.
Where can a plan administrator obtain more information about the DFVC Program?
For more information about the DFVC Program, call EBSAs Office of the Chief Accountant at 202.693.8360.

References: § 2510
 § 2560
 § 502
 § 502
 § 2520
 § 2520
 § 2520
 § 502