The IRS penalty is $250 a day up to $150,000, and it applies to retirement plans.
Internal Revenue Code Section 6652(e) assesses $250 a day, to a maximum of $150,000, for failing to file a retirement plan return on time. It does not apply to welfare plans.
How the IRS penalty works.
$250 a Day
The IRS charges $250 for each day a required return is late.
$150,000 Cap
The total for a plan year stops at $150,000.
Retirement Plans Only
The IRS penalty covers retirement plan returns. A health or welfare plan faces the Department of Labor penalty instead.
How to ask for relief.
Written Statement
The IRS can waive the penalty if the plan administrator shows reasonable cause for the delay.
Fix Quickly
Filing as soon as the problem is found supports the request.
Documentation
Keep notes showing who was responsible and why the filing was missed.
Related Programs
The DOL program also offers a path for plans that file late, with its own fixed charges.
Quick answers.
Short answers. This is general information, not legal or tax advice.
Do health plans owe this one?
No. The IRS penalty applies to retirement plans.
Is the penalty per plan?
It applies for each late return, up to the cap.
Where does CFH help?
We help keep you ERISA compliant on the benefit plans we advise.
Where the rules and figures come from.
Each figure on this page comes from the source below. Amounts are indexed or updated over time, so confirm current figures before relying on them.
26 U.S.C. 6652
Subsection (e): IRS failure to file penalty on retirement plan returns.
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Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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