Amid all the good news for the defined contribution industry from the SECURE Act, there is one component for which sponsors will certainly hold their applause.
The law orders a tenfold increase in penalties from the IRS for the late, incomplete or inaccurate filing of an annual Form 5500.
Effective immediately, the daily penalty rises to $250 from $25, and the maximum climbs to $150,000 per annual report from $15,000.
Relatively speaking, the good news is that "we don't see a ton of IRS enforcement" on Form 5500, said Ellen Goodwin, a Washington-based attorney for Groom Law Group.
The bad news, Ms. Goodwin added, is that daily penalties charged by the Department of Labor under ERISA for the same infractions are $2,330 per day this year with no cap. The ERISA penalties aren't affected by the SECURE Act.
"The DOL has a really active enforcement program" for ERISA violations, Ms. Goodwin explained.
She said late filing is a common problem, sometimes caused by a delay in a plan timely securing an auditor's OK before submitting the Form 5500.
The Labor Department has a late-filer program that can provide "significant relief" for sponsors affected by Labor Department and IRS penalties if they meet certain reporting requirements and other conditions, she said.
Better yet, file the document on time.
