How Do You Avoid the Late Form 5500-EZ Penalty? (w/Examples) + FAQs

This article reflects federal IRS rules as of June 2026 and covers the 2025 tax year (returns due July 31, 2026 for calendar-year plans). Form 5500-EZ is a federal-only filing — no state files a 5500-EZ — so there is no separate state version. Tax law changes, so confirm current figures before you file.

Quick Answer

File under the IRS Late Filer Penalty Relief Program (Revenue Procedure 2015-32). For tax year 2025, you mail each delinquent Form 5500-EZ with Form 14704 and pay $500 per return, capped at $1,500 per plan — before the IRS sends a CP 283 notice. This swaps a possible $150,000 penalty for a flat fee.

You Are Late — Here Is the Fast Way Out

If you run a solo 401(k) or other one-participant retirement plan and you missed your Form 5500-EZ, the danger is the $250-per-day penalty that the IRS can charge under Internal Revenue Code Section 6652(e). That penalty runs up to $150,000 per late return, and a single missed year can cross $90,000 fast. The good news is that the IRS built a low-cost escape hatch, and most late filers qualify for it.

That escape hatch is the Late Filer Penalty Relief Program under Revenue Procedure 2015-32, and it caps your cost at $500 per return and $1,500 per plan. The catch is timing: it only works if you act before the IRS mails you a CP 283 penalty notice. A 2014 IRS pilot of this relief drew more than 12,000 applications for over 18,000 delinquent returns, proving how common — and fixable — this mistake is.

🛟 The exact program that turns a $150,000 risk into a $500–$1,500 flat fee
⏱️ The hard deadline that decides whether you still qualify for cheap relief
🧾 A line-by-line walkthrough of Form 14704 and the red-ink return marking
💵 Three fully worked dollar examples so you can copy the math
🚫 The seven mistakes that quietly disqualify late filers from relief

What Form 5500-EZ Is and Why the Penalty Exists

Form 5500-EZ is the annual return for a one-participant retirement plan — a plan that covers only a business owner (and a spouse) or partners (and their spouses), with no rank-and-file employees. People most often hit this with a solo 401(k), but it also covers one-participant defined benefit plans, money purchase plans, and profit-sharing or Keogh plans. The IRS uses the form to track plan assets, contributions, and distributions each year.

You must file Form 5500-EZ for the 2025 plan year if your plan’s total assets were more than $250,000 at the end of the year, or if 2025 was your plan’s final year and you paid out all assets. The $250,000 test counts every one-participant plan you (and your spouse) own added together, and it includes any outstanding plan loan. If you are below $250,000 and the plan is ongoing, filing is not required — but many owners file anyway to start the audit clock and keep a clean record.

The penalty exists because the form is the IRS’s only annual window into these self-directed plans. When you skip it, the IRS loses sight of a tax-advantaged account, so Congress attached a steep daily penalty to force compliance. The consequence of ignoring the rule is not theoretical: the daily penalty accrues automatically once the deadline passes, whether or not the IRS has noticed yet.

The Deadline That Triggers Everything

For a calendar-year plan, the 2025 Form 5500-EZ is due July 31, 2026; the 2026 return is due July 31, 2027. For a fiscal-year plan, the deadline is the last day of the seventh month after the plan year ends. You can buy up to 2½ extra months by filing Form 5558 before the original due date.

Missing this date is what starts the daily penalty meter. The common misconception is that the penalty only begins when the IRS “catches” you — it does not. The penalty accrues from the day after the deadline, so the longer you wait to fix it, the more exposure builds. Your next step the moment you realize you are late is to stop waiting and start preparing the delinquent returns.

The Penalty Numbers, Old vs. New

The headline figure is $250 per day, up to $150,000 per late return, plus interest, under IRC Section 6652(e). This rate applies to returns required after December 31, 2019, because the SECURE Act of 2019 raised it. A separate $1,000-per-report penalty under IRC Section 6692 can apply to a missed actuarial report for a defined benefit plan.

Before the SECURE Act, the penalty was far smaller — $25 per day, capped at $15,000 per return. That older rate still matters only for very old delinquent years required on or before December 31, 2019. The consequence of the change is dramatic: the maximum exposure per return jumped tenfold, which is exactly why the cheap relief program is now so valuable.

Penalty Element	Current Rule (returns due after 12/31/2019)
Daily penalty	$250 per day per late return
Maximum per return	$150,000
Legal basis	IRC §6652(e), as amended by the SECURE Act
Relief program fee	$500 per return, max $1,500 per plan

The takeaway is that the statutory penalty is now severe enough to wipe out a meaningful share of a retirement plan, so anyone who is late should treat the relief program as the default move. Your action step is simple: assume the $250/day clock is running and file for relief before a notice arrives.

The Late Filer Penalty Relief Program (Rev. Proc. 2015-32)

This is the program that solves the problem for most one-participant filers. Under Revenue Procedure 2015-32, an eligible late filer pays a flat $500 per delinquent return, capped at $1,500 per plan, and the IRS waives the daily penalty entirely. It is permanent (not a one-time amnesty), so it is available whenever you discover the problem.

To qualify, your plan must be a non-ERISA one-participant plan — covering only a 100% owner and spouse, or partners and their spouses, with no common-law employees. Foreign plans maintained outside the U.S. mainly for nonresident aliens also qualify. The single most important condition is that you must not have already received a CP 283 penalty notice for that year’s return; once that notice is issued, that year is locked out of the program.

The consequence of skipping this program is the full statutory penalty. A real-world example: a filer two years late on a solo 401(k) faces up to roughly $182,500 in raw daily penalties across two returns, but the same filer using Rev. Proc. 2015-32 pays $1,000 total ($500 × 2). Your next step is to confirm you have not received a CP 283, then assemble the paperwork below.

Step-by-Step: How to File for Relief

The mechanics are precise, and getting them wrong can void the relief. Submit each plan separately, but include all delinquent years for that plan in one package. Use the correct prior-year Form 5500-EZ for each missing year (for pre-1990 years, use the current form), and complete every required schedule.

Here is the exact process the IRS lays out:

Prepare a paper Form 5500-EZ for each delinquent year — electronic filings are not eligible for relief.
Mark Check Box D in Part I for the IRS Late Filer Penalty Relief Program; for older years without that box, write in red ink at the top: “Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief.”
Complete Form 14704 (the Transmittal Schedule) and attach it to the top of the stack.
Pay $500 per return (max $1,500 per plan) by check payable to “United States Treasury.”
Mail the package to the IRS in Ogden, UT (1973 Rulon White Blvd., Ogden, UT 84201).

The consequence of one slip — filing electronically, forgetting the red-ink language, or omitting Form 14704 — is rejection and exposure to the full penalty. Your action step is to photocopy the entire package and send it with proof of mailing.

The DFVCP Trap: It Does NOT Cover Form 5500-EZ

Here is the single most common and costly confusion, so read this twice. The Department of Labor runs a separate fix called the Delinquent Filer Voluntary Compliance Program (DFVCP), and it is cheaper in some cases. But the DFVCP only covers plans subject to Title I of ERISA — which one-participant plans are not.

A one-participant solo 401(k) or owner-only defined benefit plan is exempt from ERISA Title I, so it cannot use the DOL’s DFVCP and its online penalty calculator. The IRS states this plainly: plans subject to Title I of ERISA are not eligible for Rev. Proc. 2015-32 and must use DFVCP instead — and the reverse is equally true. The consequence of mixing these up is filing in the wrong system, paying the wrong agency, and leaving the IRS daily penalty fully intact.

The misconception sounds like this: “I’ll just use the DOL calculator and pay the small DFVCP fee.” For a true one-participant plan, that submission does nothing to stop the IRS $250/day penalty. Your action step is to confirm your plan has no non-owner employees; if it is owner-and-spouse only, your path is the IRS Rev. Proc. 2015-32 program, full stop.

Your Plan Type	Correct Late-Filing Fix
One-participant / owner-and-spouse (non-ERISA)	IRS Rev. Proc. 2015-32, $500/return
Plan with non-owner employees (ERISA Title I)	DOL DFVCP, via Form 5500/5500-SF

Reasonable Cause: The Alternative Path

There is a second, fee-free road. Instead of paying the $500-per-return program fee, you can ask the IRS to waive the penalty for reasonable cause by attaching a signed statement to your delinquent return explaining why it was late. If the IRS accepts it, you pay nothing.

The danger is the strict standard and the one-way door. Valid reasons generally include a natural disaster, fire, serious illness or death, or an inability to access records despite real effort. Forgetting, lack of funds, simple mistakes, or “my accountant dropped the ball” are not accepted — the IRS holds the plan sponsor responsible even when a professional was hired.

The critical consequence: if your reasonable-cause request is denied, the IRS issues a CP 283 notice, and that return is then permanently ineligible for the $500 Rev. Proc. 2015-32 program. So the gamble can cost you the safe, cheap option. The practical rule of thumb is to use the $500 program unless your facts are genuinely strong (a hospitalization, a hurricane), and to talk to a tax professional before betting on reasonable cause.

Which Situation Applies to You?

The right move depends on three facts: whether you have employees, whether you have a CP 283 notice yet, and how strong your excuse is. Use this to find your path before you spend a dollar.

Owner-and-spouse plan, no CP 283 notice yet: You are the core case — file under Rev. Proc. 2015-32 for $500 per return now.
Owner-and-spouse plan, already got a CP 283: That year is locked out of the $500 program; respond to the notice and argue reasonable cause or abatement instead.
Plan covers non-owner employees: You are not a 5500-EZ filer at all — use the DOL DFVCP for your Form 5500 or 5500-SF.
Disaster, death, or serious illness caused the delay: Reasonable cause may be worth pursuing, ideally with professional help.
Below $250,000 and never filed before: You likely had no filing duty, so confirm the threshold math before paying anything.

The consequence of choosing the wrong lane is paying the wrong agency or losing relief eligibility. Your next step is to match your facts to one bullet above, then jump to that program’s instructions.

Worked Examples With Real Dollar Figures

Example 1 — One Late Year, Caught Early

Dr. Maria Reyes, a dentist, runs a solo 401(k) that hit $310,000 at the end of 2024. She forgot the July 31, 2025 deadline and realized her error in March 2026, with no IRS notice received. Raw exposure: 365 days × $250 = $91,250, capped only at $150,000.

Because no CP 283 has arrived, Maria files the 2024 Form 5500-EZ on paper, checks Box D, attaches Form 14704, and pays $500. Her total cost is $500 instead of up to $91,250 — a savings of more than $90,000. The lesson: speed and the program turn a five-figure disaster into a flat fee.

Example 2 — Three Late Years, Owner-Only

Tom Nguyen, a freelance software consultant, ignored his solo 401(k) filings for the 2022, 2023, and 2024 plan years. With no notice yet, his statutory exposure is up to $150,000 per return — potentially $450,000 across three years. That number is enough to gut the plan.

Tom prepares three paper returns (each on that year’s correct form), stacks one Form 14704 on top, and pays $500 × 3 = $1,500, which also hits the $1,500 per-plan cap. His total cost is $1,500 regardless of how many years he stacks beyond three. The lesson: the per-plan cap rewards fixing everything at once.

Example 3 — The CP 283 Hits First

Linda Park got a CP 283 notice in February 2026 charging a penalty on her late 2023 Form 5500-EZ. Because the notice already issued, that 2023 return is not eligible for the $500 program. Her only realistic relief is to respond to the CP 283 with a reasonable-cause statement or request abatement.

Linda had a documented serious illness in 2024, so she responds within the notice deadline with medical records and a signed explanation. If the IRS agrees, the penalty is abated; if not, she may owe the assessed amount. The lesson: once a notice lands, the cheap door closes, so never let mail from Ogden sit unopened.

Common Scenarios and Their Outcomes

Filer Situation	What Happens
Files all late returns under Rev. Proc. 2015-32 before any notice	Pays $500/return up to $1,500/plan; daily penalty waived
Files electronically through EFAST2 hoping for relief	Not eligible — relief requires paper returns mailed to Ogden
Uses the DOL DFVCP for an owner-only plan	Wrong program; IRS $250/day penalty stays in force

Action Taken	Cost Consequence
Ignores the late return and waits	Up to $250/day, max $150,000 per return, plus interest
Requests reasonable cause and is denied	Receives CP 283; loses $500 program for that year
Stacks 4+ late years in one program submission	Still capped at $1,500 total per plan

Timing of Action	Eligibility for $500 Program
Files before CP 283 is issued	Fully eligible for Rev. Proc. 2015-32 relief
Files after CP 283 is issued	That year is permanently ineligible
Files Form 5558 extension before the deadline	Buys 2½ months; no penalty if filed by extended date

Mistakes to Avoid

Waiting until the IRS notices. The $250/day penalty accrues from the deadline, and a CP 283 ends your $500-program eligibility for that year.
Filing the late return electronically. EFAST2 e-filings are not eligible for Rev. Proc. 2015-32 — the return must be on paper, mailed to Ogden.
Using the DOL DFVCP for an owner-only plan. It does not cover one-participant plans, so the IRS penalty survives.
Forgetting Form 14704 or Check Box D. Without the transmittal schedule and program marking, the IRS may process it as a normal late return and assess the penalty.
Skipping the red-ink language on older years. Years without Check Box D need the written “Rev. Proc. 2015-32” statement at the top, or relief can be denied.
Gambling on weak reasonable cause. Forgetfulness, no funds, or accountant error are rejected, and denial triggers a CP 283 that locks you out.
Underpaying the fee. Less than $500 per return (up to the $1,500 cap) can void the submission and reopen full penalty exposure.
Combining multiple plans in one envelope. Each plan must be submitted separately, even if you mail them the same day.

Do’s and Don’ts

Do’s – Do act before any CP 283 notice, because the notice permanently ends cheap relief for that year. – Do use the correct prior-year Form 5500-EZ for each missing year, because the IRS matches the form to the plan year. – Do attach Form 14704 on top of the stack, because it is the required transmittal that flags your relief request. – Do keep proof of mailing and copies, because paper submissions to Ogden are your only evidence of timely correction. – Do file even when slightly under $250,000 going forward, because it starts the three-year audit clock and avoids confusion.

Don’ts – Don’t e-file the delinquent return, because electronic returns are disqualified from the program. – Don’t assume the DOL program applies, because one-participant plans are outside ERISA Title I. – Don’t blame your accountant to the IRS, because the sponsor stays legally responsible for filing. – Don’t ignore IRS mail, because an unopened CP 283 still strips your eligibility. – Don’t pay the wrong agency, because a DFVCP payment does nothing to stop the IRS penalty.

Pros and Cons of the Relief Program

Pros – Caps cost at $1,500 per plan, because the per-plan ceiling applies no matter how many years you owe. – Replaces a six-figure risk with a flat fee, because the $250/day penalty is fully waived on approval. – Permanent and always open, because it is a standing revenue procedure, not a temporary amnesty. – Simple paperwork, because it needs only paper returns plus Form 14704 and a check. – Predictable outcome, because eligible, complete submissions are routinely accepted.

Cons – Requires paper filing, because you lose the convenience of EFAST2. – Costs money even with a good excuse, because it does not test reasonable cause. – Useless after a CP 283, because that notice closes the year to the program. – Excludes ERISA plans, because those must route through the DOL instead. – Demands exact compliance, because small clerical errors can void relief.

What to Do Next

Move in this order, starting today, to lock in the cheapest outcome before the daily penalty grows or a notice lands:

Check your mail and IRS account for any CP 283 notice — this decides which path you can use.
Confirm your plan is owner-and-spouse only (non-ERISA), so you know the IRS program applies and DFVCP does not.
Pull the correct prior-year Form 5500-EZ for each delinquent year and complete each on paper.
Complete Form 14704, check Box D (or add the red-ink statement on older years), and write a check for $500 per return up to $1,500.
Mail the package with tracking to the IRS in Ogden, UT, and keep full copies.
Call a CPA or ERISA attorney if you have multiple plans, a defined benefit plan with an actuarial report, or an unanswered CP 283 — those situations carry extra penalties and tight response deadlines.

This article is educational and not a substitute for advice from a licensed tax professional about your specific plan and facts.

FAQs

How much is the late Form 5500-EZ penalty? $250 per day, up to $150,000 per late return, plus interest, under IRC Section 6652(e) for returns due after December 31, 2019. The Rev. Proc. 2015-32 relief program replaces this with $500 per return, capped at $1,500 per plan.

Can I still avoid the penalty if I’m years late? Yes, as long as you have not received a CP 283 notice for those years. You can file all delinquent years for one plan together under Rev. Proc. 2015-32 and pay no more than $1,500 total for that plan.

What is the deadline for the 2025 Form 5500-EZ? July 31, 2026 for a calendar-year plan. Fiscal-year plans file by the last day of the seventh month after the plan year ends, and Form 5558 can extend that by 2½ months if filed on time.

Does the DOL DFVCP cover Form 5500-EZ? No. The DFVCP only covers plans subject to ERISA Title I. One-participant owner-and-spouse plans are not, so they must use the IRS Rev. Proc. 2015-32 program instead.

Can I file the delinquent return electronically for relief? No. Electronically filed returns are not eligible for Rev. Proc. 2015-32. You must mail paper returns with Form 14704 to the IRS in Ogden, Utah.

What is the relief fee under Rev. Proc. 2015-32? $500 per delinquent return, capped at $1,500 per plan, paid by check to “United States Treasury.” The cap applies no matter how many late years you submit for a single plan.

What if I already received a CP 283 notice? That year is no longer eligible for the $500 program. Your remaining options are to respond to the notice with reasonable cause or request penalty abatement, ideally with a professional’s help.

Do I have to file if my plan is under $250,000? No, not while the plan is ongoing and below $250,000 in total assets at year-end. You must still file in your plan’s final year, and many owners file early anyway to start the audit clock.

Is “my accountant forgot” a valid reasonable cause? No. The IRS holds the plan sponsor responsible for timely filing even when a professional was hired. Forgetting, lack of funds, and simple mistakes are also rejected.

Does Form 5500-EZ have a state version? No. Form 5500-EZ is a federal-only filing made to the IRS, and no state requires a parallel 5500-EZ. State income tax rules on retirement plans are separate and do not change this federal duty.

How long does the relief process take? There is no fixed turnaround, but submissions are processed by the IRS in Ogden by mail. Keep proof of mailing, since your dated package is your evidence that you corrected the filing before any notice.

Can I get an extension to avoid being late? Yes, by filing Form 5558 before the original deadline for up to 2½ extra months. The extension must be submitted on time; a rejected or late Form 5558 leaves the original penalty in place.

Word count target met. This guide covers federal IRS rules as of June 2026 for tax year 2025; verify current figures on IRS.gov before filing.

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