Form 5500 Late Filing Penalty Relief: DFVCP and IRS Abatement

If you missed a Form 5500 deadline, penalty relief for a late Form 5500 filing runs through two separate tracks because two agencies assess penalties independently. The Department of Labor’s Delinquent Filer Voluntary Compliance Program (DFVCP) will cap the DOL penalty at $750 to $4,000 per plan depending on size, and the IRS side is resolved either through a reasonable cause abatement request or, for one-participant plans, a streamlined $500-per-return program under Revenue Procedure 2015-32. You have to work both tracks. Paying one agency does nothing for the other.

What You’re Facing If You Do Nothing

The daily penalties are severe and they run in parallel.

Under ERISA Section 502(c)(2), the DOL can assess up to $2,739 per day for a late or incomplete Form 5500 for 2025 plan year filings, with the figure adjusted for inflation each January.¹² The IRS layers a second penalty under Internal Revenue Code Section 6652(e) at $250 per day, capped at $150,000 per return.³ Combined, the two exceed $2,900 per day until you file.

The key to relief is coming forward before either agency contacts you. Once the DOL sends written notice about a missed filing, the DFVCP is off the table.⁴ The IRS-streamlined program has the same trap: once you’ve received a CP 283 penalty notice for a year, that year no longer qualifies.

Resolving the DOL Penalty Through the DFVCP

The DFVCP replaces the daily statutory fine with a flat $10 per day, subject to low per-plan caps. The caps depend on whether the plan is small or large as of the beginning of the plan year, using a 100-participant threshold. Participants include active employees, retirees and former employees who still have account balances, and eligible employees who haven’t enrolled.¹

Small Plan Caps (Under 100 Participants)

A small plan pays $10 per day, capped at $750 for a single late annual report. If you’re filing multiple delinquent years at once for the same plan, the total is capped at $1,500 regardless of how many years are overdue. Plans sponsored by 501(c)(3) tax-exempt organizations get a $750 per-plan cap.⁵

Large Plan Caps (100 or More Participants)

A large plan also pays $10 per day, but the single-filing cap is $2,000 and the multi-year cap for one plan is $4,000.⁵ Note that the caps apply per plan, not per sponsor. If you administer three separate plans that are all delinquent, you’ll pay the applicable cap for each one.⁴

How to Submit the DFVCP Filing

The submission has two steps and the order matters.

First, file each delinquent return electronically through EFAST2. Prepare a complete Form 5500 (or Form 5500-SF if eligible) for each missed year with all required schedules and attachments. In Part I, Line D, check the box marked “DFVCP.” Missing that checkbox is a common error, and without it the DOL may treat the submission as an ordinary late filing and assess full statutory penalties.⁶

Second, after EFAST2 finishes processing (which can take up to 24 hours), use the DFVC Penalty Calculator on the DOL’s website to link your filing, compute the reduced penalty, and pay. The system accepts ACH transfers, credit cards, and debit cards through Pay.gov. Paper checks are no longer accepted as of September 30, 2025.⁶

Once payment clears, save the confirmation permanently. A properly completed DFVCP submission produces a full waiver of the statutory DOL penalties for the covered years.

Resolving the IRS Penalty

The IRS side is harder. For most plans there’s no equivalent low-flat-fee program. You have to prove you had a good reason for filing late.

Reasonable Cause Abatement

The IRS will waive Section 6652(e) penalties only if you show that the failure resulted from circumstances beyond your control rather than neglect.³ The burden is on you, and the IRS decides based on the specific facts.

Arguments that have historically worked include death or serious illness of the person responsible for the filing, destruction of records by fire or other casualty, and reasonable reliance on a competent tax professional’s erroneous advice. That last one has strict conditions: the advisor must have had genuine expertise in the area, you must have given them all necessary information, and reliance must have been objectively reasonable.⁷ The IRS treats the obligation to file on time as non-delegable, so “my preparer forgot” is not enough.

Arguments that almost never work: simple oversight, not knowing about the requirement, or lack of funds to hire a preparer.

To request abatement, file the delinquent return first, then respond to the resulting penalty notice (typically CP 283) with a written explanation or IRS Form 843.⁸ Attach documentation: medical records, casualty insurance claims, a detailed statement from the professional whose advice you relied on. Vague good-faith language won’t move the needle.

First Time Abate Does Not Cover Form 5500

Worth stating plainly because many plan sponsors assume otherwise: the IRS’s First Time Abate program does not apply to Form 5500 penalties. It’s limited to failure-to-file penalties under IRC Section 6651, partnership and S corporation return penalties under Sections 6698 and 6699, and failure-to-deposit penalties under Section 6656.⁹ Section 6652(e) is not on that list.

The Streamlined Program for One-Participant Plans (Form 5500-EZ)

If your plan covers only a business owner (or partnership owners) and their spouses, you have a much better option. Under Revenue Procedure 2015-32, the IRS offers a streamlined penalty relief program that doesn’t require a reasonable cause explanation at all. The fee is $500 per delinquent return, capped at $1,500 per plan.¹⁰

The requirements:

Eligible plans are non-ERISA one-participant plans only. Plans subject to ERISA Title I must use the DFVCP instead.
You must not have already received a CP 283 penalty notice for the year in question.
File on paper. Electronically filed returns do not qualify. Prepare paper Form 5500-EZ for each delinquent year and check Box D in Part I for the penalty relief program. On older forms without Box D, write “Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief” in red at the top of each return.
Attach Form 14704 to the top of the submission as the transmittal.
Include a check payable to “United States Treasury” for $500 per return, up to $1,500 per plan.

Mail the whole package to the IRS Submission Processing Center in Ogden, Utah.¹⁰

If the IRS Denies Your Abatement Request

A denied reasonable cause request can go to the IRS Independent Office of Appeals for a fresh review.⁹ Appeals operates independently from the unit that issued the denial, so a well-documented case that lost at the first level can still win. This is worth pursuing when the penalty amount is large and the underlying facts genuinely support the claim.

Situations That Don’t Fit These Programs

Some late filings fall outside the DFVCP and the standard IRS programs — a plan that terminated years ago and never filed a final Form 5500 is a common example. The DOL occasionally publishes limited administrative relief through Field Assistance Bulletins from the Employee Benefits Security Administration.¹¹ These windows are narrow and time-limited, but if your circumstances match one, it can resolve exposure that nothing else covers. Check the current bulletins before concluding you have no path.

One Prevention Note If You’re Not Late Yet

If the deadline hasn’t actually passed, file Form 5558 for an automatic extension of up to two and a half months instead of walking into a late-filing situation. For a calendar-year plan whose Form 5500 would normally be due July 31, this pushes the deadline to October 15. Starting January 1, 2025, Form 5558 can be filed electronically through EFAST2 or mailed on paper to the IRS Ogden processing center, and no signature is required for Form 5500 series extensions.¹²¹³ A properly filed extension is granted automatically. If it’s already too late for that, the DFVCP and the IRS programs above are where the work happens.

1
Department of Labor. 2025 Instructions for Form 5500 Annual Return/Report of Employee Benefit Plan
2
Federal Register. Annual Civil Monetary Penalties Inflation Adjustment
3
Office of the Law Revision Counsel. 26 USC 6652 – Failure To File Certain Information Returns, Registration Statements, Etc.
4
U.S. Department of Labor, Employee Benefits Security Administration. Delinquent Filer Voluntary Compliance Program Fact Sheet
5
U.S. Department of Labor. Delinquent Filer Voluntary Compliance Program
6
U.S. Department of Labor – Employee Benefits Security Administration. DFVC Penalty Calculator
7
IRS.gov. Reasonable Cause and Good Faith
8
Internal Revenue Service. About Form 843, Claim for Refund and Request for Abatement
9
Internal Revenue Service. Administrative Penalty Relief
10
Internal Revenue Service. Penalty Relief Program for Form 5500-EZ Late Filers
11
U.S. Department of Labor. Field Assistance Bulletins
12
IRS.gov. Form 5558 (Rev. January 2025) – Application for Extension of Time To File Certain Employee Plan Returns
13
Internal Revenue Service. Form 5558 Reminders