SECURE Act Alert: Big Increases in Late-Filing Penalties

Lisa Showalter - Business Development Director
Lisa Showalter – Business Development Director

Many of the SECURE Act’s provisions are great for retirement plan sponsors. What’s not to like about greater contribution flexibility, tax credits for starting a plan, and the ability to add automatic enrollment? However, with these important benefits comes a potential plan pitfall: the Act substantially increases penalties for failing to file Form 5500 and Form 8955-SSA (among others) on a timely basis.

Under the SECURE Act, effective with filings due after December 31, 2019, the IRS can impose these penalties for late filing:

  • Form 5500 — $250 per day, with a maximum of $150,000 per plan (per plan year missed). This is an increase from $25 per day, up to a maximum penalty of $15,000. In addition, the DOL can still impose a penalty of $2330 per day for a late Form 5500 filing (the dollar amount is adjusted for inflation but was not changed by the Act).
  • Form 8955-SSA — $10 per participant per day, with a maximum penalty of $50,000. Previously, there was a daily penalty of only $1 per participant, not to exceed $5,000.
  • Form 5310-A – Up to $250 per day, not to exceed $150,000 per plan year. This is up from $25 a day, not to exceed $15,000 per plan year. (This form is late if it is not filed at least 30 days before a plan merger or consolidation, spin-off, or transfer of plan assets or liabilities.)

In addition, for failing to provide income tax withholding notices, the IRS will impose a penalty up to $100 for each failure, not to exceed $50,000 for the calendar year. This is up from $10 for each failure, not to exceed $5,000.

These are just some of the penalties your plan may incur if you file late – the SECURE Act increases penalties for some other forms, as well.

We’re Here to Help

At TRA, we want to make sure that your plan doesn’t get hit with these new penalties – or any others, for that matter!

Our third-party administrative services minimize the chance that you will miss plan filing deadlines. In addition, many clients choose the convenience of our 3(16) Delegated Fiduciary Services, which specifically include preparing, signing and timely filing of the Form 5500 and Form 8955-SSA on behalf of plan sponsors.

With TRA, you can rest easy in the knowledge that we’re handling critical filings on time. And that you are avoiding expensive penalties.

If you have already missed filings an important first step would be to use the DOL’s Delinquent Filer Voluntary Compliance Program (DVFCP) as soon as possible. The IRS will generally waive their late-filing penalties for Form 5500 series filers who satisfy the DFVCP requirements. Also, by using the DFVCP, the DOL penalties are reduced and capped. TRA can also help you navigate your way through the DFVCP.

Contact your TRA Regional Sales Consultant today to learn more the potential impact of the SECURE Act on your plan.

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