The two penalties: IRS vs. DOL
Every Form 5500-series filing gets reported to both the IRS and the Department of Labor, and a late or missing return can draw a penalty from each of them, independently, for the same return. They don't share a cap, and paying one doesn't satisfy the other.
| IRS penalty | DOL penalty |
|---|
| Amount | $250 per day | Up to $2,739 per day |
| Maximum | $150,000 per return | No maximum |
| Authority | IRC § 6652(e) | ERISA § 502(c)(2) |
| Who's liable | The plan administrator, personally — usually the business owner or a designated fiduciary |
| Voluntary fix | Coordinated relief via the program used below | DFVCP (standard plans) caps and reduces this penalty |
The good news: satisfying the DOL's relief program for a given return also helps coordinate abatement of the related IRS penalty, so you're generally not paying both in full if you act voluntarily. Which program you use depends entirely on your plan type.
Why this figure keeps changing
The DOL penalty is adjusted for inflation roughly every January under the Federal Civil Penalties Inflation Adjustment Act, which is why the per-day figure creeps up year over year. If you're reading this after early 2027, check the DOL's current published figure before assuming $2,739/day still applies; the IRS's $250/day and $150,000 cap, by contrast, are fixed statutory amounts set by the SECURE Act and don't move annually.
Which relief program applies to you
There are two separate voluntary-compliance programs, and they're not interchangeable — using the wrong one, or waiting too long, can forfeit the discount entirely.
| DFVCP (Standard Plans) | Rev. Proc. 2015-32 (One-Participant Plans) |
|---|
| Who it's for | Any ERISA Title I plan with at least one common-law employee participant | Solo 401(k)s and other one-participant/foreign plans, no employees |
| Run by | Department of Labor | Internal Revenue Service |
| Cost structure | $10/day, generally capped around $750 per filing for a small plan (under 100 participants) or $2,000 for a large plan — confirm current caps on the DOL's DFVCP page | Flat $500 per return, capped at $1,500 per plan |
| Deadline to use it | Before the DOL sends a penalty notice | Before a CP 283 penalty notice is issued |
| How to file | Electronically through the DOL's DFVCP online system | Paper only, with Form 14704, mailed to Ogden, UT |
If your plan has never had an employee beyond the owner (and spouse, or partners and their spouses), skip ahead to the solo 401(k) / Form 5500-EZ walkthrough below. If your plan covers employees, use DFVCP through the Department of Labor — the mechanics differ from the EZ program covered in depth here, so confirm current fees and steps directly on the DOL's DFVCP page before filing.
The filing requirement most solo 401(k) owners never hear about
Form 5500-EZ is the annual return for one-participant retirement plans — solo 401(k)s covering only a business owner (and spouse) or partners (and their spouses). Two triggers create the duty to file:
- The $250,000 threshold: total assets across your one-participant plans exceed $250,000 on the last day of the plan year.
- The final-year rule: the year a plan terminates and distributes all assets, a final return is required regardless of balance — even a $61,000 plan owes a final 5500-EZ.
The due date is the last day of the seventh month after the plan year ends — July 31 for calendar-year plans. Form 5558, filed by July 31, buys an automatic extension to October 15.
Why so many people miss it: contributions take years to cross $250,000, but a single rollover — say, moving an old IRA into the solo 401(k) as step one of a backdoor Roth — can blow past the threshold overnight. And your custodian does not file this for you. When the IRS sampled one-participant plan filers, most sponsors contacted had missed at least one 5500-EZ.
Already got a penalty notice? Reasonable cause is the remaining path
Once either agency formally assesses a penalty — a CP 283 from the IRS, or a determination letter from the DOL — the voluntary programs above are off the table for that return. But the penalty is still fightable with both agencies. The standard is reasonable cause: you exercised ordinary business care and prudence and still couldn't comply. Documented serious illness, death in the family, disaster, or records you genuinely couldn't obtain are the classic fact patterns. Respond within the notice deadline with a signed statement and evidence; if denied, you can take it to the IRS Independent Office of Appeals.
Romeo Razi, CPA — Former IRS Auditor
"I've watched five-figure 5500-EZ penalties get assessed against people whose only mistake was a rollover they didn't know crossed a threshold. Here's the pattern that matters: the IRS's own program forgives almost everything for $500 a year — but only until the CP 283 lands. The single most expensive thing you can do is let mail from Ogden sit unopened. If you're behind, file under the relief program this week, not after the IRS writes first. And when a penalty is abated, remember the interest that accrued on it comes off too."
Related reading: our full guide to IRS penalty abatement and reasonable cause, the new Automatic Exemption from Penalty (AEP) program (note: AEP covers income and employment tax returns — it does not cover Form 5500-EZ, an information return), and what to do about IRS balance-due notices. If penalties have already snowballed into a balance you can't pay, see installment agreements and Currently Not Collectible status.
A note on court cases: unlike income tax deficiencies, Form 5500 penalties are almost never litigated. They're civil information-return penalties resolved administratively — through DFVCP, Rev. Proc. 2015-32, or a reasonable-cause response to the notice itself — rather than through Tax Court, which has narrow jurisdiction here. If you see a page citing specific "5500 penalty court rulings," read it carefully; the real leverage is in the agency programs above and in the reasonable-cause response, not case law.
Frequently asked questions
What is the penalty for late filing of Form 5500?
A late Form 5500 triggers two separate penalties. The IRS penalty is $250 per day, up to $150,000 per return, under IRC Section 6652(e). The DOL penalty is up to $2,739 per day with no maximum. Both regulators can assess independently for the same late filing, and the plan administrator is personally liable. Two relief programs exist to fix this before either penalty is assessed: DFVCP for standard, multi-participant plans, and Rev. Proc. 2015-32 (a flat $500 per return) for one-participant plans like solo 401(k)s.
What is the DOL penalty for a late Form 5500, and how is it different from the IRS penalty?
The DOL penalty, assessed under ERISA Section 502(c)(2), can run up to $2,739 per day late with no statutory maximum — uncapped, unlike the IRS's $150,000 ceiling. The two penalties are separate and can both apply to the same late return, from two different agencies. Filing under DFVCP before either agency assesses replaces the DOL penalty with a capped fee, and satisfying DFVCP also helps coordinate relief from the related IRS penalty.
What is DFVCP and how much does it cost?
The Delinquent Filer Voluntary Compliance Program (DFVCP) is the DOL's voluntary correction program for standard, multi-participant ERISA plans that missed a Form 5500 or 5500-SF deadline — the equivalent of the IRS's Rev. Proc. 2015-32 program for solo 401(k)s. The fee is $10 per day late, generally capped around $750 per filing for a small plan (under 100 participants) or $2,000 for a large plan, well below the DOL's uncapped daily penalty. Completing DFVCP also helps coordinate abatement of the related IRS penalty. It isn't available for one-participant plans, which use Rev. Proc. 2015-32 instead. Confirm current fee caps on the DOL's DFVCP page before filing, since program fees are periodically adjusted.
Who is exempt from filing Form 5500?
The main exemptions: most governmental plans and church plans (unless the church elected ERISA coverage) don't file at all. Fully insured or unfunded welfare benefit plans with fewer than 100 participants — think a small group health plan with no separate trust — are also generally exempt. And one-participant plans, like a solo 401(k), don't owe a filing until plan assets exceed $250,000 at year-end or the plan terminates. If none of those apply and your plan has employee participants, you almost certainly owe a Form 5500 — confirm with a plan administrator or ERISA counsel if you're unsure, since exemption rules have edge cases.
What counts as reasonable cause for late filing Form 5500?
Reasonable cause means you exercised ordinary business care and prudence but were still prevented from filing on time by circumstances beyond your control — for example, a natural disaster or fire that destroyed records, a serious illness or death in the immediate family, or records you genuinely could not obtain despite diligent effort. Simply not knowing about the filing requirement generally does not qualify. It's evaluated case by case after a penalty notice arrives — a fallback once the voluntary programs are no longer available for that year, not a substitute for filing on time.
Who has to file Form 5500-EZ?
One-participant retirement plans — a solo 401(k) or similar plan covering only a business owner (and spouse), or partners (and their spouses), with no common-law employees. You must file for any year the plan's total assets exceed $250,000 on the last day of the plan year, and you must always file a final return in the year the plan terminates and distributes all assets, regardless of the balance.
When is Form 5500-EZ due?
The last day of the seventh month after the plan year ends — July 31 for calendar-year plans. You can extend to October 15 by filing Form 5558 by July 31. Miss July 31 without an extension and you're delinquent on day one, with the $250-per-day clock running.
What is the penalty for filing Form 5500-EZ late?
$250 per day, up to $150,000 per late return, plus interest, under IRC Section 6652(e) as amended by the SECURE Act (a tenfold increase from the old $25/day, $15,000 cap). You hit the $150,000 maximum after just 600 days, and the plan administrator — you personally — is liable. Three missed years can theoretically stack to $450,000.
What is the $500 fix for a late 5500-EZ?
The IRS Penalty Relief Program under Revenue Procedure 2015-32: file the delinquent returns on paper with Form 14704 attached and pay a flat $500 per late return, capped at $1,500 per plan no matter how many years you missed. The IRS waives the daily penalty entirely. It's a permanent program, not a one-time amnesty.
How do I file under Rev. Proc. 2015-32 step by step?
(1) Prepare a complete paper Form 5500-EZ for each delinquent year. (2) Check Box D in Part I ('IRS Late Filer Penalty Relief Program'); for pre-2020 form years without Box D, write 'Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief' in red at the top. (3) Attach Form 14704 to the front of the submission. (4) Include a check for $500 per return (max $1,500 per plan) payable to United States Treasury. (5) Mail to the IRS in Ogden, UT — electronic EFAST2 filings are NOT eligible. Keep certified-mail proof.
What if I already received a CP 283 penalty notice?
Then the $500 program is closed for that year — Rev. Proc. 2015-32 is only available before the IRS assesses the penalty. Your remaining path is reasonable cause abatement: respond to the CP 283 within the deadline with a documented explanation (serious illness, disaster, records you couldn't obtain despite ordinary business care). If denied, you can appeal to the IRS Independent Office of Appeals. This is exactly the kind of case a former IRS auditor handles.
What notices does the IRS send for a missing 5500-EZ?
Roughly 15 months after the due date you may get a CP 403 delinquency notice — by which point the daily penalty math already sits around $112,500. If you don't respond in 30 days, a CP 406 final notice follows about 15 weeks later. If the IRS then assesses, you receive CP 283 (Penalty Charged on Your Form 5500 Return) — and the cheap $500 door closes for that year. Never let mail from Ogden sit unopened.
I never filed because I didn't know my solo 401(k) crossed $250,000 — am I alone?
Not remotely. The IRS sampled one-participant plan filers and found most sponsors contacted had missed at least one Form 5500-EZ. The classic trigger is a rollover: moving an old IRA or 401(k) into your solo 401(k) — a common step in backdoor Roth planning — can push the balance over $250,000 overnight. And no, your custodian (Fidelity, Schwab, Vanguard) does not file this for you; the responsibility is yours as plan administrator.
Does the relief program cover plans with employees?
No. The moment a plan covers any employee beyond the owners and their spouses, it's an ERISA Title I plan and uses the Department of Labor's Delinquent Filer Voluntary Compliance Program (DFVCP) instead. Note that S corporation shareholders owning 2%+ are treated like partners for the one-participant test.
Do I even owe a filing? How do I check before paying $500?
Verify two things first: (1) did combined assets across all your one-participant plans exceed $250,000 on the last day of the plan year, and (2) is this the plan's final year (final-year returns are required at ANY balance)? If your solo 401(k) held $180,000 at year-end and it isn't the final year, you had no filing duty — don't pay a relief fee you don't owe.
By Romeo Razi, CPA — Former IRS Tax Examiner
·Published July 14, 2026
·Updated September 2, 2026 · Fact-checked against IRS & DOL primary sources