August 14, 2023
I Received a Notice About My Form 5500. Now What?
The Form 5500 Annual Return/Report of Employee Benefit Plan serves to provide information to both the Department of Labor (DOL) and the Internal Revenue Service (IRS) to ensure the welfare of employees participating in the plans covered by Form 5500.
These agencies take this responsibility seriously, and failure to properly file the Form 5500 or reporting incorrect information, may result in substantial penalties for your organization.
When the DOL or IRS reviews the Form 5500, you may receive a written notice from either (or both) agencies regarding your filing. Recently, the DOL started sending emails to previous filers of the Form 5500 with reminders to file, and other helpful details, so it is important to monitor for these if you have been involved with a previous filing, while exercising caution that such correspondence is coming from a valid source, prior to responding.
An important reminder: Formal communication from the DOL or the IRS that requires a response will always be sent as physical correspondence, and a formal inquiry will never be initiated via telephone call, email, or fax.
Your organization may receive written correspondence from the DOL. Common communications from the DOL include:
- Inquiry Letter (always sent Certified or Overnight Delivery)
- Notice of Rejection (NOR) (always sent Certified or Overnight Delivery)
- Notice of Intent to Assess a Penalty Letter (NOI) (always sent Certified or Overnight Delivery)
- Notice of Determination Letter (NOD) (sent without certification, as no response is required).
Learn more about each type of DOL communication below.
Your organization may also receive written correspondence from the IRS. Common communications from the IRS include:
- CP403 and CP406 – Delinquency Notice
- CP216H – Denial of Extension to File
- CP216F – Acceptance of Form 5500 or Form 8955-SSA Extension
Learn more about each type of IRS communication below.
Understand The Penalties
While not all communications from the DOL or IRS result in penalties, failure to properly resolve them can quickly spell trouble.
If a required Independent Qualified Public Accountant Audit Report is missing or considered incomplete, penalties may be applied by the DOL at $150/day up to a maximum of $50,000.
Penalties for failing to supply critical information with the filing may be $100/day up to a maximum of $36,500, and missing or inadequate information considered to be non-critical at $10/day up to a maximum of $3,650.
Ultimately, the DOL and IRS together may assess penalties of up to $2,400 per day for non-filing.
Because there is a limited response window for notices, it is a best practice to notify your CPA advisor whenever you receive a communication regarding your Form 5500 from the DOL or the IRS, prior to initiating correspondence.
Your advisor can also let you know when it may be valuable to alert legal counsel.
Additionally, be on the lookout for emails that come directly from the DOL. While it would be easy to mark these as potential spam, it may be an important reminder from the DOL, following through on which may avert one of the formal notices discussed.
Need Additional Assistance?
With the expertise and guidance of the Johnson Lambert Team, your inquiries regarding a written notice or any other aspects related to your employee benefit plan can be swiftly addressed. We are here to provide the necessary assistance and ensure your peace of mind.
The content contained herein is provided solely for educational purposes to Johnson Lambert LLP’s intended audience, and should not be relied upon as accounting, tax, or business advice because it does not take into account any specific organization’s facts and circumstances.