Small businesses that sponsor retirement plans but have not filed the required reporting documents are catching a break from Uncle Sam. The IRS has announced a one-year pilot program that allows small business owners who may not have been aware of the requirement to file an annual Form 5500 to avoid stiff penalties by filing current and delinquent returns during the one-year window.

Small business plan administrators and sponsors, which often include the business owner, who do not file a Form 5500 can face up to $15,000 in penalties for each year they have not filed. The IRS pilot program is designed to allow delinquent small businesses to "catch up" and become compliant with the filing requirements. No filing fee will be required, and multiple returns can be filed at one time.

The program is only open to "one-participant" retirement plans, defined by the IRS as a retirement plan with one or more participants that covers the owner of a business, the owner and owner's spouse, or a business' partners and their spouses, but does not provide benefits to anyone else.

To find out if your company's retirement plan is eligible, or for more information on the IRS pilot program for small business retirement plans, please contact us.