What is DFVCP?
Delinquent Filer Voluntary Compliance Program
A late Form 5500 filing can cost the employer severe monetary penalties under ERISA and the Internal Revenue Code, plus potential IRS and PBGC penalties. Willful or continued filing failures can result in criminal sanctions or other equitable relief (such as removal of the plan fiduciaries and appointment of an independent fiduciary).
The good news is that most late Form 5500 filings can be voluntarily corrected through the Delinquent Filer Voluntary Compliance Program (DFVCP). Penalties under DFVCP are significantly reduced and capped.
DFVCP is not available if the plan has already been contacted by the DOL about the late filing. Rather, a plan fiduciary must timely appeal any penalty assessed by demonstrating reasonable cause for the late filing.
Filing under DFVCP can resolve a lot of filing issues. The plan fiduciary must electronically file the incomplete or missing Form 5500s for which relief is being sought, including all required schedules and must check the appropriate box on the Form 5500. It must also calculate and pay penalties using the online calculator provided by the DOL. Both the IRS and PBGC also extend relief from late filing penalties where the plan has satisfied DFVCP conditions for correction.