Form 5500 Annual Return/Report of Employee Benefit Plan

Each year, employee benefit plan administrators are generally required to file a return/report regarding the plan’s financial condition, investments and operations. The annual reporting obligation is generally satisfied by filing the Form 5500 Annual Return/Report of Employee Benefit Plan or Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan, plus any required schedules and attachments. The Department of Labor (DOL), Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) jointly developed the Form 5500 series to consolidate the main annual reporting requirements for employee benefit plans.

The Form 5500 series is intended to protect the rights and benefits of plan participants and beneficiaries by assuring that:

  • Employee benefit plans are operated and managed in accordance with certain prescribed standards
  • Employee benefit plan participants and beneficiaries are provided with or have access to sufficient plan information

In addition, the Form 5500 series is an important compliance, research and disclosure tool for the DOL. It is also a source of information and data for use by other federal agencies, Congress and the private sector in assessing employee benefit, tax and economic trends and policies.

An employee benefit plan’s Form 5500 or 5500-SF must accurately reflect the plan’s characteristics and operations for the reporting period. An employee benefit plan administrator’s reporting obligations under the Form 5500 or 5500-SF will vary based on the type and size of benefit plan involved. For example, the administrator of a small, insured health plan will typically have significantly fewer reporting obligations than the administrator of a large pension plan.

On July 21, 2016, a proposed rule was published regarding the Form 5500 filing requirements. Significantly, the proposed rule would eliminate the current filing exemption for small group health plans, both insured and unfunded. Also, a new Schedule J would be used to report detailed information about group health plan operations and compliance. The new rule was proposed to apply for plan years beginning on or after Jan. 1, 2019. However, it is unclear whether the Trump administration will move forward with the proposed changes.

Below is an abbreviated version of frequently asked questions about the Form 5500.

Am I required to file a Form 5500 or 5500-SF for my employee benefit plan?

Administrators of ERISA employee benefit plans are required to file an annual Form 5500 or 5500-SF, unless a reporting exemption applies. More specifically, if you are the administrator of a profit sharing plan, stock bonus plan, money purchase plan, 401(k) plan, defined benefit plan, 403(b) plan or welfare benefit plan, you must file a Form 5500 or 5500-SF for the plan each year.

Certain welfare benefit plans are exempt from all or part of the Form 5500 series reporting requirements. For example, there is an exemption from Form 5500 series reporting for small welfare benefit plans (fewer than 100 participants at the beginning of the plan year) that are unfunded, fully insured or a combination of unfunded and fully insured. More information on which welfare benefit plans are exempt from the filing requirement is provided below.

The Form 5500 filing requirement does not apply to cafeteria plans based on the rationale that cafeteria plans are merely funding vehicles. However, a Form 5500 or 5500-SF is required for any component benefit plan that is an ERISA welfare plan (for example, health FSAs and dental, long-term disability, AD&D and group term life plans), unless an exemption applies.

Which welfare plans must file a Form 5500 or 5500-SF?

Must File:

  • Large funded plans
  • Large unfunded plans
  • Large insured plans
  • Large combination unfunded/insured plans
  • Small funded plans

Exempt from filing:

  • Small unfunded plans
  • Small insured plans
  • Small combination unfunded/insured plans
  • Unfunded or insured plans for certain select employees (management or highly compensated employees)
  • Employer-sponsored day care centers
  • Certain apprenticeship and training plans
  • Plans not subject to ERISA
What is a small plan?

Small plans are those with fewer than 100 covered participants at the beginning of the plan year.

Who are covered participants?

Participants are covered by the plan on the earlier of: (1) the date the plan says participation begins; (2) the date the individual become eligible to receive a benefit; or (3) the date the individual makes a voluntary or mandatory payment. Participants may include employees and former employees (for example, COBRA beneficiaries).

Covered dependents are NOT counted as participants when determining if a plan qualifies for the small plan exemption.

What is an unfunded plan?

Unfunded plans are those where benefits are paid solely from the general employer assets and not from plan assets in whole or in part. Participant contributions (except if accepted through a cafeteria plan) are plan assets under DOL regulations.

What is an insured plan?

Insured plans are those where benefits are paid solely through insurance policies. Premiums must be paid directly by the employer from its general assets. Alternatively, premiums may be paid partly from an employer’s general assets and partly by participant contributions, which the employer forwards no later than three months after receipt.

What is the deadline for filing Form 5500 or 5500-SF?

Form 5500 or 5500-SF must generally be filed by the last day of the seventh month following the end of the plan year, unless an extension applies. For calendar year plans, the deadline is normally July 31 of the following year.

Am I required to file a Form 5500 or 5500-SF if the employee benefit plan was terminated during the prior year?

Yes. If an employee benefit plan was terminated last year, a final Form 5500 or 5500-SF is generally due on the last day of the seventh month following the date of the plan termination. The last annual report for a plan is called a “terminal report.” The terminal report cannot be filed until all the plan’s assets have been distributed or legally transferred, or all benefit liabilities under a welfare benefit plan have been satisfied.

What is my employee benefit plan’s number?

The employer assigns the plan number. The plan number should appear in the plan’s summary plan description. Once a plan number has been used for a plan, it should not be used for any other plan, even if the first plan has been terminated. Generally, retirement plans are numbered sequentially from 001, and welfare benefit plans are numbered sequentially from 501.

What are the penalties for not complying with the Form 5500 or 5500-SF requirements?

The DOL and IRS can assess penalties for noncompliance with the annual reporting requirements, including submitting incomplete Forms 5500 or 5500-SF or not filing Forms 5500 or 5500-SF by the due date. For example, the DOL has the authority under ERISA to assess penalties of up to $2,140 per day for each day an administrator fails or refuses to file a complete Form 5500 or 5500-SF.

The penalties may be waived if the noncompliance was due to reasonable cause. The IRS can also impose civil penalties for noncompliance with certain Form 5500 or 5500-SF reporting obligations. In addition, ERISA provides for criminal penalties for willful violations of its reporting requirements.

Who do I contact if I have questions about completing Form 5500 or 5500-SF?

For answers to your filing questions, please contact your tax advisor or the DOL’s Employee Benefits Security Administration (EBSA) at 1-866-463-3278. You may find answers to your questions by referring to the online resources noted above.

Also, please contact your Account Manager at American Health & Wellness Group for additional information or resources.


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