June 23, 2014

Several years ago the Department of Labor (DOL) instituted a program that allowed plan sponsors to avoid delinquent filer penalties in exchange for payment of a relatively low predetermined fee if the delinquent reports were filed under its Delinquent Filer Voluntary Compliance (“DFVC”) Program.

However, the Internal Revenue Service (“IRS”) has a separate penalty reporting structure, and a trap for the unwary arose initially in 2009 when the DOL failed to include required IRS reporting information for previously terminated participants in a retirement plan, thus resulting in a “glitch” in system for those who tried to properly use the DOL’s DFVC program to minimize the penalty cost to correct for previously unfiled returns.

More information is available in our full e-alert.