Form 5500 late filing penalty: two agencies, two statutes

Two penalties, not one

A late Form 5500 exposes the plan to two separate penalties from two agencies under two statutes. The Department of Labor assesses under ERISA section 502(c)(2). The IRS assesses under Internal Revenue Code section 6652(e). They are settled by different routes, so one can disappear while the other stays. Never add them into a single figure. The sum is a number nobody bills, and it hides which agency's figure is doing the damage.

The Department of Labor's daily maximum under ERISA section 502(c)(2) for 2026 is $2,739, the same figure as 2025, and the Department gave the reason at 91 FR 31358, published 27 May 2026: the October to November 2025 lapse in appropriations meant the Bureau of Labor Statistics could not produce the October 2025 CPI-U figure, and the statute allows no alternative method, so the 2025 amount continues to apply.

The IRS penalty under Internal Revenue Code section 6652(e) is $250 a day, capped at $150,000 per return, under 26 U.S.C. 6652(e).

The Department of Labor side, and the figure that did not move

Section 502(c)(2) is a discretionary penalty. The statute sets a daily maximum, the Department adjusts it for inflation by notice in the Federal Register, and "up to" is doing real work: the Department may assess less. Ask about a ceiling on the total and this page gives no figure, because the register behind it does not carry one.

The indexation is where most published guidance is wrong this year. The figure last moved for 2025, up from $2,670 the year before, and then it stopped. Any page or spreadsheet that raises the number every January is quoting a 2026 figure that was never published. An adjustment also attaches to the assessment rather than the violation: under 29 CFR 2575.3 and the Department of Labor's annual adjustment table at 90 FR 1854, an annual adjustment applies to penalties assessed after the date the annual adjustment is published in the Federal Register. The date of assessment decides the rate, not the date the return went late.

Because the daily figure is high and runs for every day, the DOL side produces the big number in a plan-book register. It is also the one with the cleanest exit, and that exit is the DFVCP section below.

The IRS side

Section 6652(e) is fixed rather than discretionary: a set amount for each day, with a cap per return. Under 26 U.S.C. 6652(e) the penalty does not apply where the failure is due to reasonable cause. The IRS usually learns of the late return from the filing data itself and assesses by notice after the fact, which is why a plan can pay its DFVCP fee and still get an IRS letter months later if the relief condition below was missed.

The IRS count is also the only one an extension helps. Under 26 U.S.C. 6652(e), the section 6652(e) count is determined with regard to any extension of time for filing, so a valid extension moves the day the IRS count starts. Hold that next to the row below.

Side by side

Why the DFVCP fee replaces the DOL penalty

The Delinquent Filer Voluntary Compliance Program is the Department of Labor's standing offer: file the missing return, pay a fixed fee, and the Department does not assess its 502(c)(2) penalty for that return. The offer is open until the Department has given written notice of the failure to file. The letter closes it.

Under 78 FR 6135, Section 3.03(b), the DFVCP fee is $10 a day, capped for a small plan at the greater of $750 per annual report or $1,500 per plan on a multi-year submission, and for a large plan at the greater of $2,000 or $4,000.

Set the capped fee next to the daily maximum above and the decision makes itself for any plan that has not had the letter. One warning on the arithmetic: the fee is counted from the original due date even where a Form 5558 was filed, so a plan that extended does not get a shorter DFVCP count. It gets a shorter IRS count and the same DFVCP one. The extension page is built around that split.

What the IRS does when a DFVCP filing is made

Under IRS Notice 2014-35, IRS relief from sections 6652(d), 6652(e) and 6692 follows where the plan is eligible for and satisfies DFVCP for the delinquent return, and any Form 8955-SSA required for that year is filed separately with the IRS on paper.

The condition is the whole point. A plan that owes a Form 8955-SSA for the late year and does not file it has paid the DFVCP fee and left the IRS penalty live. When an IRS letter turns up after a DFVCP payment, this is the first thing to check. The 8955-SSA page covers who files one and how it is marked.

One-participant plans are outside all of this. They file Form 5500-EZ, cannot use DFVCP, and have a separate IRS relief program with its own fee.

One late return, both agencies priced

A large plan, one year unfiled, no letter yet. The two exposure rows are the two statutes. The DFVCP fee row is what the first of them costs instead, once the plan files and pays.

Note which figure the participant count changed. It picked the large plan pair of caps, so the fee row is the large per-report figure. Both exposure rows would read the same for a small plan with the same dates, because each one is a daily rate times a day count and neither rate depends on the size of the plan.

Where this lands for a plan book

For one plan the arithmetic is short. For a TPA holding hundreds, the useful output is a register with two columns of exposure per plan, DOL and IRS, a third column for the DFVCP fee that replaces the first, and a flag on every plan where the 8955-SSA condition is unmet. The clock produces that from a pasted list. The plans where the IRS column stays live after the DFVCP fee are the ones to work first. If you hold one plan, run the clock and you are done.