What is Form 5500?

Form 5500 is an annual report containing information about retirement plans, as well as health and welfare plans, provided by employers. Employers must file with the IRS and the Department of Labor. A 5500 filing includes IRS Form 5500, as well as supporting schedules and documents.

The IRS and DOL use Form 5500 to ensure that companies comply with tax laws, ERISA and other regulations designed to protect employee interests.

A 5500 filing includes a variety of details about company-provided plans:

• Number of active participants
• Number of retired or separated participants
• Beneficiaries of deceased participants receiving plan benefits
• The plan’s financial condition
• Investments and operations
• Compliance with laws and regulations
• Information about the plan administrator
• Information about fidelity insurance

If you file a Form 5500, you’ll list some of this information on the form itself, but you’ll have to include other information on supporting schedules.

Which companies are required to file Form 5500?

Offering retirement plans and other benefits can be a vital piece of a competitive compensation strategy, but they also add new accounting responsibilities for employers. Employers must complete a 5500 filing if they offer certain types of retirement or benefit plans. If you, as an employer, provide any plan covered by ERISA, you must file 5500 forms.

Types of plans that require a 5500 filing

Not every type of retirement or benefit plan requires a 5500 filing, but many do. Employers offering benefit plans covered by ERISA are almost always required to file. These plans can include:

• Profit-sharing plans
• Stock bonus plans
• 401(k) s
• Some 403(b) plans
• Individual retirement accounts (IRAs) established by the employer under section 408(c)

Some pension benefit plans, such as simplified employee pension (SEP) plans, don’t require you to file a form 5500.

You may also need to file form 5500 if your business offers health and welfare plans covered by ERISA, including:

• Medical and dental insurance
• Life insurance
• Scholarship funds
• Severance pay
• Disability benefits

Generally, if your business offers any plan funded through a trust, you’ll have to file. Unfunded plans, such as those paid from the employer’s general assets and plans where premiums are paid directly to an insurer, only require a 5500 filing if there are more than 100 participants.

Use the correct form based on the number of participants

There are three versions of form 5500, and you’ll need to use the correct form for the number of plan participants.

• Use Form 5500 if there are 100 or more plan participants.
• 5500-SF, also known as the short form 5500, is used for plans with less than 100 participants.
• Finally, use Form 5500-EZ when the only plan participants are the business owner, partners in the business and the owners’ spouses. Many single-participant plans are exempt from filing 5500-EZ, and this form is usually only required for plans with assets of more than $250,000.

Required Schedules

In addition to IRS Form 5500 itself, you must file the corresponding Form 5500 Schedule required for your plan. You’ll need to complete the correct schedules based on the characteristics of your plan. The 5500-series schedules are:

• Schedule A: Insurance Information
• Schedule C: Service Provider Information
• Schedule D: DFE/Participating Plan Information
• Schedule G: Financial Transaction Schedules
• Schedule H: Financial Information
• Schedule I: Financial Information – Small Plan
• Schedule MB: Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information
• Schedule R: Retirement Plan Information
• Schedule SB: Single-Employer Defined Benefit Plan Actuarial Information

Fidelity bond requirements and form 5500

ERISA requires all plan fiduciaries and anyone who has the authority to handle assets to be covered by a fidelity bond. Fidelity bonds insure the plan against fraud or dishonesty by the bonded party (i.e. those handling assets).

Under ERISA, fidelity bonds usually need to cover 10% of the plan assets at the beginning of the plan year or $500,000, whichever is less. You should report fidelity bond information on Schedule H or I.

What is a summary annual report?

A plan administrator must provide a summary annual report (SAR) to plan participants every year. The SAR contains a summary of the information reported on Form 5500 and related schedules. It also informs plan participants of their rights to additional information.

The SAR must be provided within nine months of the end of the plan year, and the administrator must also file a copy with the DOL.

How to file form 5500

Form 5500 and related documents must be filed electronically with the DOL using the ERISA Filing Acceptance System II (EFAST2). Some 5500-EZ filers may file a paper form, but they can also use the EFAST2 system. Companies filing a 5500 or 5500-SF must use EFAST2.

How to sign up for an EFAST2 account

Companies need a Department of Labor EFAST account to file 5500 form documents. These accounts are easy to obtain by visiting www.efast.dol.gov and following the instructions. A person authorized to complete Form 5500 on behalf of the company must be the person to sign up for the account.

Who can file 5500 forms and documents?

Many companies, especially larger ones, choose to hire a third-party business to complete these complicated documents. However, the employer maintaining the plan or a plan administrator must review the documents for accuracy and electronically sign and file the 5500 forms.

Tips for completing your 5500 filing

The IRS or DOL may reject a 5500 filing that’s incomplete or full of errors, leading to penalties for the filer. There are some common ways you can avoid mistakes related to your 5500-series forms.

Understand deadlines and required documents

Know when your deadline for filing is, especially if you administer a plan that doesn’t follow the calendar year. Use a calendar or tickler file to make sure you don’t forget the deadline. Using a tickler system can be particularly helpful if your 5500 filing deadline is not the same as other tax filing deadlines.

You’ll also need to understand which documents to submit as part of your filing. Usually, you’ll need to submit some of the 5500-series schedules.

Carefully review forms before filing

Review your forms for accurate reporting of things like:

• EIN
• Plan numbers
• Number of participants

Simple typos can lead to a form not being processed and result in penalties.

Know how to report information on your Form 5500 correctly

Understanding how to report Form 5500 information can help you avoid errors. Sometimes employers fail to count all plan participants, or the employer may forget to include plan participants who have separated from the company.

Another error is not filing Form 5500 because you consider the plan terminated. The IRS and DOL require plan administrators to file Form 5500 until all the plan’s assets have been distributed.

Large companies with multiple plans and participants may benefit from hiring a third-party business, such as an accounting firm or CPA, to assist with 5500 filings. Newer companies and small businesses that may just be learning what Form 5500 is can also benefit from outside assistance.

Due date and extensions for filing

You must file IRS form 5500 through EFAST2 by the last day of the seventh month after the plan year ends. For example, for calendar year plans, the deadline is July 31st.

Both the IRS and DOL impose penalties for late filings, so you’ll want to file your companies documents by the deadline. If you know that you won’t meet the deadline, you can request an extension by using Form 5558.

Penalties for late 5500 filings

The IRS and DOL impose severe penalties on employers who fail to file an annual Form 5500-series return. The IRS and DOL may each impose penalties.

The IRS may impose penalties of $250 per day, with a maximum penalty of $150,000. The DOL penalty can be up to $2,529 with no maximum. Plan administrators may be personally liable for penalties.

As an employer or plan administrator, you should personally ensure that the 5500-series filing occurred. Don’t assume that a partner or other person will complete the filing without clear communication. Make sure you understand what Form 5500 is and the filing requirements for plans you administer. Consider hiring outside accounting help if needed.

The Delinquent Filer Voluntary Correction Program

The DOL Delinquent Filer Voluntary Correction Program (DFCVP) can significantly reduce penalties if you realize Form 5500 wasn’t filed. The DFCV program is only available to employers who haven’t yet been notified in writing of their failure to file.

To participate in the DFVCP, you will need to file your 5500-series documents as soon as possible, including required schedules and attachments, through EFAST2. Ensure that you check the “DFVC program” box on line D of Part I of your Form 5500.

You then need to submit your filing information and payment by mail or by using the DFCVP Calculator. A successful DFCVP filing will result in significantly reduced penalties:

• A $10 per day penalty
• A “per filing” cap of $750 for a single late annual report for plans with less than 100 participants
• A “per filing” cap of $2,000 for a single late annual report for plans with 100 or more participants

The DFVCP includes a “per plan” cap that limits the penalty for a small plan to $1,500 and $4,000 for large plans, even if there are several late annual reports filed simultaneously. The purpose of this program is to encourage voluntary compliance from employers who may have failed to file for several years.

Be aware that the DFCV Program will not reduce or eliminate IRS penalties. However, the IRS may choose to offer some relief from their late-filing penalties if the DFCV Program is completed successfully.