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Form 5500 Compliance: Security Worth the Expense

For some, a statute of limitations no doubt comes in handy. But that does not include employers that are required to file the Form 5500. A recent article argues that compliance costs less than delinquency may.
 
In “Form 5500 Delinquency Can Be Costly,” ebenefitsconsulting suggests that the time and money entailed in complying with the requirement to file an accurate Form 5500 are worth the expense. Whether or not your company has the financial stability to afford a considerable penalty is not the issue. Avoiding an entanglement with the federal government at all costs is,” they argue.

How much can an entanglement cost? The article points out that filing violations which take place after Nov. 2, 2015 and are penalized after Aug. 1, 2016 can be fined as much as $2,063 per day. “Needless to say, the fiduciary ramifications in this scenario would be potentially devastating for any business,” the article says.

To avoid these dire circumstances, the article offers tips that are obvious but nonetheless may bear repeating — if they didn’t, the DOL would not have put the delinquent filer voluntary compliance program in place. They advocate the bread and butter of compliance: filing on time — by July 1, for most plans; and timely filing a Form 5558 if an extension is needed.

“Moral of the story: Keep the federal government happy and do not give them a reason to audit your business for something as simple as filing your Form 5500,” the article says.