Companies with defined contribution or insurance benefit plans have many compliance issues, including the need to report the details of their benefits programs to government agencies. To satisfy the requirements of the IRS and Department of Labor (DOL), businesses must complete and submit Form 5500 during each plan year.

Form 5500 FAQ

Companies with defined contribution or insurance benefit plans have many compliance issues, including the need to report the details of their benefits programs to government agencies. To satisfy the requirements of the IRS and Department of Labor (DOL), businesses must complete and submit Form 5500 during each plan year.

But even this routine filing can pose some difficulties, especially for businesses who have recently changed their programs. The following FAQ can help:

What is Form 5500?

Form 5500 is how businesses that offer benefits packages such as a pension, defined contribution plan or insurance policy, provide plan details to government agencies. Depending on a plan’s size, scope and participant numbers, filing can be quick and easy, requiring businesses to simply fill out a few fields, or a lengthy process requiring much more.

Businesses are tasked with disclosing how their plans are funded and operated. Agencies, using gathered Form 5500 data, prepare reports and make recommendations for the enactment of new rules, laws and regulatory policies.

The data is also used to ensure that:

  • Proper disclosures are made to plan participants.
  • Sponsors meet their fiduciary duties, and that the establishment and administration of benefits plans meet federal requirements.
  • Full benefits are received by beneficiaries.

Who Must File a Form 5500?

There is no one rule on which businesses must complete the annual filing, but, in general, plans with fewer than 100 participants at the beginning of the plan year are exempt from the requirement for that year.

Many exceptions apply, and businesses should consult a labor law advisor before relying on the small plan exemption.

What Information Needs to Be Included on Form 5500?

Form 5500 filings consist of:

  1. Main Form: Businesses fill general information about the types of benefits offered, number of participants, and how programs are funded.
  2. Schedules: Depending on what kind of benefits are offered and the number of participants, businesses may be required to submit several supplementary schedules disclosing insurance contract details, service provider information, plan information details and financial information.

A separate Form 5500 must be filed for each of the following categories:

  • Pension Plans: Defined benefit and contribution plans, including 401k and profit-sharing programs, that offer employees monetary compensation in addition to salary.
  • Welfare Plans: Insurance programs and fringe benefits such as health plans, dental care, vision and life insurance.

Businesses with “large” pension or welfare plans (over 100 participants) must file a report containing the opinion of an independent qualified accountant — usually a CPA — regarding the accuracy of the filing.

More information on what must be in a Form 5500 filing, including a helpful quick-reference chart, can be found in the form’s instructions.

Where Do I File Form 5500?

Since 2009, filing has been done electronically through the DOL’s EFAST2 filing service.

When Do I File Form 5500?

The form is due on the last day of the seventh calendar month after the end of the plan year. One-time extensions of up to two-and-a-half months are available by filing the proper request with the IRS.

What Happens if a Company Doesn’t File a Form 5500?

Companies that fail to file may face fines, enforcement, or even imprisonment (for willful violations). Employers that realize months or even years late that they missed a deadline have access to a program allowing employers to catch up with 5500 filings.

Although this program still charges employers a penalty to catch up on their filings, self-disclosure of delinquency is probably a good idea as the program is likely to be more affordable for businesses than paying the maximum $1,100 daily fine for late submissions.

Form 5500 Filings Are Your Yearly Responsibility

The number of participants in employer-sponsored health plans filing form 5500 increased by nearly 13 million in the ten years from 2001-2011 (Brien & Panis, 2014, at 8), but that doesn’t make it any easier for businesses to slide under the radar, no matter how small.

As insurance and investment plans become increasingly available to small businesses, new compliance measures are the price they are paying for the ability to compete with larger companies on benefits.

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