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DOL Notice Updates Delinquent Filer Voluntary Compliance (DFVC) Program
Practical Law Legal Update 8-523-8111 (Approx. 4 pages)
DOL Notice Updates Delinquent Filer Voluntary Compliance (DFVC) Program
by PLC Employee Benefits & Executive Compensation
| Published on 29 Jan 2013 • USA (National/Federal) |
The Department of Labor (DOL) has issued a notice that describes changes made to the Delinquent Filer Voluntary Compliance (DFVC) Program.
Under ERISA, certain employee benefit plans are required to file annual reports with the DOL, including Form 5500 and other information. Benefit plans that fail to timely file their annual report can be subject to civil penalties under ERISA Section 502(c)(2). In 1995, the DOL started the Delinquent Filer Voluntary Compliance (DFVC) Program to allow plans that fail to timely file their annual reports to admit to noncompliance in exchange for reduced penalties. Benefit plans participate in the program by filing an application and submitting the late annual reports. The DFVC Program was last updated in 2002.
On January 25, 2013, the DOL issued a notice that comprehensively restates the DFVC Program and includes the changes that have been made to the Program since 2002.
The notice discusses in detail the changes in the filing requirements of the DFVC Program, including:
- The DFVC Program has migrated from the EFAST system to EFAST2, which is completely electronic. EFAST2 applies to all filing years, which means that the DOL will not accept any paper filings (by mail or fax) for timely or delinquent filings.
- The revisions to the annual return/report forms adopted by the DOL in 2007.
- For delinquent filings for 2008 and earlier plan years, filers must use the most current year EFAST2 form and schedules available for filing in EFAST2, except that:
- filers must enter the correct plan year dates on the space provided at the beginning of the Form 5500 and attach as a pdf file the correct year Schedules B, SB, MB, E, P, R or T;
- delinquent filers providing pension funding, retirement plan and other information on those schedules must file information according to the rules that applied to the delinquent plan year in question; and
- because 2009 plan year changes for Schedule C impose new and expand annual reporting requirements for service provider fees, filers have the option of attaching a pdf image file of the correct year Schedule C when filing delinquent annual returns or reports for plan years prior to the 2009 plan year.
- For delinquent filings for 2009 and later plan years, the new EFAST2 system requires that filers use the correct plan year form and schedules. However, if the filing is for a plan year that is more than three years prior to the most recent plan year forms available for filing in EFAST2, delinquent filers must use:
- the most current versions of Form 5500/5500-SF available for filing in EFAST2; and
- the most current version of any required schedules (except for pension plan delinquent filers required to file a Schedule SB or Schedule MB, who must attach as pdf files completed correct year schedules so that they file the plan's actuarial information according to the rules that applied to the delinquent plan year in question).
- The limited pension plan reporting option can be used for delinquent filings for 2008 and prior year plans for 403(b) plans subject to Title I of ERISA. This means that they have to answer only certain questions on the most current year EFAST2 form that mirrors the reporting requirements that applied under the limited pension plan reporting option for 2008 and prior plan years.
- There is an online tool to help filers determine which versions of Forms 5500/5500-SF and schedules to use when filing delinquent annual reports or amending prior year annual reports under EFAST2.
The notice also discusses two other changes to the DFVC Program:
- Technical Changes. The notice incorporates several technical changes to the DFVC that have been announced on the DOL website. These changes include eliminating references to obsolete addresses for mailing penalty payments. The DOL believes that such changes should be announced on the DFVC Program website , rather than Federal Register notices.
- Penalty Relief. The DFVC does not provide relief from the late filing penalties contained in the IRC and Title IV of ERISA. However, when the requirements of the DFVC Program are satisfied, the DOL will provide relief from the late filing penalties under ERISA Section 4071 for late filings of the annual reports by Title I plans. Furthermore, the IRS expects to issue guidance that provides penalty relief under the Code for late Form 5500 and Form 5500-SF Annual Returns/Reports filed for Title I plans. This relief will apply where the conditions of the DFVC Program and any requirements imposed by the IRS in separate guidance have been satisfied.