If your business has an existing employee benefit plan, the deadline to file Form 5500 is approaching fast. In order to avoid the penalties associated with late filing, you should file this form by July 31.
Otherwise, you could face a $1,100 per day penalty, with a maximum of $4,000. If you miss the deadline, there are several options for relief, including the Delinquent Filer Voluntary Compliance (DFVC) program, which allows employers to pay late fees in exchange for a reduced penalty.
The IRS has extended the deadline for some taxpayers until the end of the calendar year. Those filers who were automatically granted an extension for the year must submit Form 5558.
The deadline for filing a form 5558 is the same as the original deadline for filing Form 5500. However, some taxpayers may have extended their tax filing deadlines due to the COVID-19 pandemic. The IRS has no way to confirm that a person will actually receive the extension request if they miss the deadline.
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Can you file an extension for Form 5500?
Another common mistake is the inconsistency in an employee’s employer identification number (EIN). Many employees will change their EIN for a variety of reasons, including a change of ownership or a change in company type.
For example, a sole proprietorship may change into a partnership, or a limited liability company may change into a corporation. In either case, line 4 on Form 5500 should reflect the reason for the change. Failure to do so will raise questions regarding the validity of the change.
Form 5500 Filing Deadline
The deadline for filing Form 5500 is the seventh month following the end of the plan year, or July 31 on a weekend. If you’re unable to meet the deadline, you must electronically sign and file the Form with the IRS by July 31.
Otherwise, you’ll be penalized. You must also file the form electronically with the DOL. Make sure to keep a copy of the completed Form 5500 as a record of the filing.
While the process for filing Form 5500 is straightforward, you should be aware that typographical errors can cause problems in the DOL. For example, if an employee’s name is misspelled, the DOL may mistakenly think that the plan is out of compliance.
It is best to get the help of a 401(k) service provider if you can’t complete the Form 5500 yourself. You can also find frequently asked questions on the IRS website.
What is the penalty for filing form 5500 late?
If your company’s plan ends on January 31 or on July 31, you must file Form 5500 by the last day of the seventh month after the end of the plan year. This deadline applies to calendar year plans. After filing, you should distribute the Summary Annual Report to participants.
The SAR will also include the details of the Form 5500. The SAR must be distributed to plan participants within nine months of the end of the plan year.
If you don’t file your Form 5500 on time, the DOL may refuse your filing because you didn’t submit it by the deadline. Luckily, there are a few ways to make the deadline go faster.
With the EFAST2 system, you can electronically complete the Form 5500 and save yourself the hassle of filing it on paper. Besides, the system has an automatic verification feature that will confirm your identity.