Employers, Plan Administrators Confirm All Form 5500s Timely Filed; Valuable Relief Options Available For Non-Filers


Businesses sponsoring 401(k) or other defined contribution or defined benefit pension plans, health plans or other employee benefit plans should verify that any required Form 5500s, Annual Returns of Employee Benefit Plans were timely filed and if any were not, should contact legal counsel about whether  they can come into compliance and avoid painful penalties by taking advantage of a newly announced Internal Revenue Service (IRS)  low-cost penalty relief program  for IRS penalties and a Department of Labor (DOL) voluntary compliance resolution program for Employee Retirement Income Security Act (ERISA) penalties.

In most cases, the Internal Revenue Code and ERISA each separately require that a Form 5500, Annual Return of Employee Benefit Plan be filed each year for the plan by the end of the seventh month after the close of the plan year. For plans that work on a calendar-year basis, as most do, this means the 2014 return is due on July 31, 2015.   Businesses sponsoring employee benefit plans and the plan administrator of an employee benefit plan face substantial penalties under the Internal Revenue Code and ERISA if the required Form 5500 is not timely filed.  Under the Internal Revenue Code, a business that fails to file a required Form 5500 can incur IRS penalties of up to $15,000 per return per plan year.  In addition, the plan administrator (often the sponsoring business or a member of its management) of an employee benefit plan with unfiled Form 5500s separately also can incur DOL penalties of up to $1000 per day per plan per plan year.  By simultaneously filing the late returns under both the new IRS penalty relief program and the long-standing DOL voluntary compliance resolution program, however, qualifying employers can resolve these exposures much more cost effectively.

While the DOL for many years has allowed plan administrators of retirement and other employee benefit plans the opportunity to resolve ERISA late or non-filing penalties through late filing under its Delinquent Filer Voluntary Compliance Program (DFVCP), the IRS only recently has established a companion program  for small employers to use to resolve Internal Revenue Code penalty exposures of employers failing to file the required Form 5500 for their retirement plans.  Based on its positive experience from a one-year pilot program, however, the IRS in May, 2015 now has implemented a new permanent penalty relief program that allows qualifying employers to resolve the Internal Revenue Code penalties for failing to file a Form 5500 required by the Internal Revenue Code.

The DOL DFVCP is available for use by plan administrators of retirement or welfare benefit plans sponsored by employers of all sizes. Plan administrators of employee benefit plans with unfiled required Form 550s can fix the penalty to resolve their ERISA penalty exposures for non- or late-filing of a required  Form 5500s for all unfiled years at $1,500 per submission for “small plans” (generally, fewer than 100 participants at the beginning of the plan year) and $4,000 per submission for “large plans” (generally, 100 participants or more at the beginning of the plan year).   A single filing for each plan for all plan years for which a required Form 5500 for that plan has not been timely filed can resolve the potential ERISA penalties for all unfiled plan years.  Further reduced penalty caps are applicable to submissions for certain 501(c)(3) organizations and for Top Hat and Apprenticeship programs. However, by filing late returns under this program, eligible filers can avoid these penalties by paying only $500 for each return submitted, up to a maximum of $1,500 per plan.

In contrast, the new IRS program is only offers penalty relief from the Internal Revenue Code’s penalties for failure to file a required Form 5500 for plans sponsored by small businesses with plans covering a 100 percent owner or the partners in a business partnership, and the owner’s or partner’s spouse (but no other participants), and certain foreign plans. While employers sponsoring employee benefit plans with broader coverage do not qualify for relief under the new IRS penalty relief program, employers sponsoring these employee benefit plans nevertheless should visit with legal counsel about options for resolving their existing penalty exposures for non-filing as legal counsel often can negotiate reductions in penalties with the IRS for employers voluntarily late filing forms.  Such relief generally is not available under the new penalty relief from for small employers or otherwise if the IRS already has assessed a penalty for late filing.  Accordingly, it is important for employer and plan administrators to evaluate whether there are any unfiled required Form 5500s for any plan year for their employee benefit plans and act promptly to voluntarily resolve these issues through late filing before the IRS or DOL discovers the omission.

For Legal or Consulting Advice, Legal Representation, Training Or More Information

If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

A practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, Ms. Stamer’s more than 27 years’ of leading edge work as a practicing attorney, author, lecturer and industry and policy thought leader have resulted in her recognition as a “Top” attorney in employee benefits, labor and employment and health care law.

Recognized as a “Top” Employee Benefits, Labor and Employment and Health Care Lawyer, Board Certified in Labor and Employment law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, the State Bar of Texas and the American Bar Association, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, and an ABA Joint Committee on Employee Benefits Council Representative, Ms. Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health, pension, severance and other employee benefit, human resources, and related insurance, health care, privacy and data security and tax matters and policy.

Ms. Stamer’s legal and management consulting work throughout her career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk with a special emphasis on employee benefits, compensation and management controls. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes.

As a key part of this work, Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements.

She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, expatriot and medical tourism, on site medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities. In these and other engagements, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others. She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large-scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

In the course of this work, Ms. Stamer has accumulated an impressive resume of experience advising and representing clients on HIPAA and other privacy and data security concerns. The scribe for the American Bar Association (ABA) Joint Committee on Employee Benefits annual agency meeting with the Department of Health & Human Services Office of Civil Rights for several years, Ms. Stamer has worked extensively with health plans, health care providers, health care clearinghouses, their business associates, employer and other sponsors, banks and other financial institutions, and others on risk management and compliance with HIPAA and other information privacy and data security rules, investigating and responding to known or suspected breaches, defending investigations or other actions by plaintiffs, OCR and other federal or state agencies, reporting known or suspected violations, business associate and other contracting, commenting or obtaining other clarification of guidance, training and enforcement, and a host of other related concerns. Her clients include public and private health plans, health insurers, health care providers, banking, technology and other vendors, and others. Beyond advising these and other clients on privacy and data security compliance, risk management, investigations and data breach response and remediation, Ms. Stamer also advises and represents clients on OCR and other HHS, Department of Labor, IRS, FTC, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She also is the author of numerous highly acclaimed publications, workshops and tools for HIPAA or other compliance including training programs on Privacy & The Pandemic for the Association of State & Territorial Health Plans, as well as HIPAA, FACTA, PCI, medical confidentiality, insurance confidentiality and other privacy and data security compliance and risk management for Los Angeles County Health Department, ISSA, HIMMS, the ABA, SHRM, schools, medical societies, government and private health care and health plan organizations, their business associates, trade associations and others.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations. She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas. She also works as a policy advisor and advocate to health plans, their sponsors, administrators, insurers and many other business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or http://www.stamerchadwicksoefje.com the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also may be interested reviewing other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com such as:

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©2015 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.

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