As an HR professional or employer, there are many regulations you must keep in mind when offering employee benefits. Filing reports is an essential task to ensure your benefits remain compliant. Internal Revenue Service (IRS) Form 5500 is no expectation.
This article will explain what Form 5500 is, what employee benefit plans are required to file one, and how your organization can ensure compliance.
What is Form 5500?
Form 5500 is an annual report organizations file with the Department of Labor (DOL). It includes information about a benefit plan’s financial condition and operations. It was created by the federal government in Titles I and IV of the Employee Retirement Income Security Act of 1974 (ERISA).
All organizations covered under ERISA must file Form 5500. However, the specific form you’ll use depends on the size of your organization and how many employees participate in your benefits.
The Form 5500 series also includes research and disclosures for the DOL, disclosure plans for the plan participants, and compiles information and data for federal agencies and Congress to assess employee benefits trends.
Its purpose is to ensure that benefit plans operate according to ERISA standards.
Which Form 5500 do you need to use?
There are a few different versions of Form 5500.
The different forms are:
- Form 5500
- Organizations with 100 or more plan participants must file this form. Unlike the other Forms listed below, Form 5500 can be complex and requires additional forms to complete.
- Form 5500-SF
- A condensed version of Form 5500 for plans with fewer than 100 plan participants that satisfy the DOL independent audit waiver, are 100% invested in eligible assets like mutual funds, and hold no employer securities.
- Form 5500-EZ
- A version of Form 5500 for one-participant plans, such as single-owner businesses with no employees and their spouses. Plans with less than $250,000 in assets don’t need to file any form.
- Business partnerships with plans that only cover partners must also file this form.
- All foreign plans that are required to file a return under Section 6058 will use this form.
You can use the DOL’s Form 5500 Version Selection Tool1 to help determine which form to file. Plan administrators can enter their plan year to get started. From there, the system will ask if your benefit plan is a foreign plan or if it is a one-participant plan.
If you have a foreign plan, it will tell you to use Form 5500-EZ. If you select “no,” you’ll be presented with more options to help you narrow down the specific form for your organization. These questions include whether your plan is a multiemployer plan, if you were required to file Form M-1, and details about your plan’s investments and assets.
What benefit plans are subject to ERISA and Form 5500 filing?
While any organization with a retirement savings plan must file Form 5500, other types of plans may be required to submit one.
This includes certain health and welfare plans like medical insurance, dental insurance, and disability benefits.
Health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs) are also subject to ERISA and Form 5500 annual reporting requirements.
What benefit plans are exempt?
Some organizations and plans are exempt from filing Form 5500. This includes government entities and churches, any plan maintained primarily for compliance with unemployment, disability regulations, or workers’ compensation insurance, and plans entirely maintained outside of the U.S. for non-U.S. citizens.
What are an employer's Form 5500 filing requirements?
We’ll break down the filing requirements for each type of plan below.
Plans with 100 or more participants
If you have a benefits plan with at least 100 participants, you need to use electronic filing for Form 5500 through the EFAST22 portal. Paper filing is no longer accepted, but you can keep the signed paper document on file for your records.
To file, you’ll need to register on the website and accept the privacy statement.
With this form, there are additional documents you may need to attach. You can find details for these forms in the Form 5500 instructions3.
| Additional forms | Details |
|
Schedule A4- Insurance Information |
Used to report premium amounts and insurance agent commission details for insurance plans. This excludes self-funded plans such as FSAs or HRAs. |
|
Schedule C5- Service Provider Information |
Reports details on fees in excess of $5,000. This is often used by self-funded insurance plans such as FSAs and HRAs. |
|
Schedule D6- DFE/Participating Plan Information |
For employee benefit plans that participate in or invest in CCTs, PSAs, MTIAs, or 103-12 IEs. Also required for direct filing entities (DFEs). |
|
Schedule G7- Financial Transaction Schedules |
For a large plan, MTIA, 103-12 IE, or GIA to report any loans, leases, or income obligations that are in default. |
|
Schedule H8- Financial Information |
Must be attached to forms for all organizations with 100 or more participants. |
|
Schedule MB9- Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information |
Required for most multiemployer benefit plans. |
|
Schedule R10- Retirement Plan Information |
Required for plans subject to IRS Code Section 412 or ERISA Section 302. |
|
Schedule SB11- Single-Employer Defined Benefit Plan Actuarial Information |
Required for most single-employer defined benefit plans. |
Plans with fewer than 100 participants
If you have a benefits plan with fewer than 100 participants, you need to use electronic filing for Form 5500-SF through EFAST22.
To file, you’ll need to register on the website and accept the privacy statement.
Part I of the form asks for annual report identification information. You’ll enter the starting and ending date for your plan. Then, you’ll check whether the report is for a single-employer or multiemployer plan, if it’s a first report, last report, a short plan year return, or an amended return, and whether you’re filing an extension under Form 5558, or another extension program. If you retroactively adopted your plan under the SECURE Act, you’ll need to check a box at the bottom of the section.
Part II of the form involves filling out your basic plan information. This includes the name of the plan, the effective plan date, your EIN, contact information, address, business code, the plan administrator (if different from the plan sponsor), and the number of participants at the beginning and end of the year.
Part III asks for your plan’s financial information. This includes the total assets and liabilities at the beginning and end of the plan year, and any participant contributions received. You’ll also total any expenses for the plan.
In Part IV, you’ll enter any pension feature codes or welfare feature codes, which are found in the form instructions.
Part V asks you various compliance questions. You’ll mark each section with a yes or no, and the amount, if applicable.
You’ll complete Part VI if your benefit is subject to any minimum funding requirements, while Part VII asks if you’ll be terminating the plan or transferring liabilities and assets to another plan.
You’ll electronically sign the document and submit it online.
You may also need to attach additional documents. You can learn more about these supplemental forms in the Form 5500-SF instructions.
|
Additional forms |
Details |
|
Schedule A4 - Insurance Information |
Used to report premium amounts and insurance agent commission details for insurance plans. This excludes self-funded plans such as FSAs or HRAs. |
|
Schedule D6 - DFE/Participating Plan Information |
For employee benefit plans that participate in or invest in CCTs, PSAs, MTIAs, or 103-12 IEs. Also required for direct filing entities (DFEs). |
|
Schedule I12- Financial Information - Small Plan |
Same as Schedule H, but for plans with fewer than 100 participants. |
|
Schedule MB9 - Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information |
Required for most multiemployer benefit plans. |
|
Schedule R10 - Retirement Plan Information |
Required for plans subject to IRS Code Section 412 or ERISA Section 302. |
|
Schedule SB11 - Single-Employer Defined Benefit Plan Actuarial Information |
Required for most single-employer defined benefit plans. |
One-participant plan filers or foreign plans
Form 5500-EZ can be filed electronically through EFAST22 as of January 1, 2021. However, you can submit a paper form for this version only by mailing it to the IRS office in Ogden, Utah.
In Part I, you’ll provide your annual return identification information. This includes the plan start and end date, any Form 5558 or special extensions, and whether the plan is foreign.
You’ll provide your basic plan information in Part II. This includes the name of the plan, plan number, the employer’s name and address, your EIN, and contact information. You’ll also provide the number of plan participants and the plan administrator if different from the plan sponsor.
Part III asks for financial information, such as total plan assets, while Part IV allows you to enter feature codes from the instructions sheet13.
You’ll answer compliance and funding questions in Part V and then sign the form at the bottom.
Completing Form 5500 can be a lot of work. Mistakes are common, which can delay your filing and lead to audits. To avoid any pitfalls, be sure to look over your work. Reread questions to ensure you’ve answered them fully and correctly. Make sure that you’ve checked the correct boxes, entered the right codes and EIN, and consulted with professionals to ensure compliance. For more details, you can consult the Form 5500-EZ instructions.
What is an audit report?
Large plans and some smaller plans that don’t meet the DOL’s waiver requirements are required to also submit an independent audit report. These must be done by a third-party CPA that checks the plan to ensure any financial statements meet the Generally Accepted Accounting Principles (GAAP).
When is Form 5500 due?
Form 5500 is due for most organizations on the last day of the seventh month following the plan year. For calendar year plans starting January 1 each year, this is July 31.
Organizations can request extensions of up to two and a half months by filing Form 5558 with the IRS before the deadline.
What are the penalties for filing Form 5500 late?
If you file Form 5500 after the IRS filing deadline, your organization could be subject to penalties from the IRS and the DOL. IRS penalties for late filing can be up to $250 per day, maxing out at $150,000. The DOL, meanwhile, can fine you up to $1,100 per day.
However, filing late doesn’t necessarily mean you’ll be penalized. If you qualify, you can apply for the DOL’s Delinquent Filer Voluntary Compliance Program14 (DFVCP) to reduce your penalties. However, delinquent filers need to do this before they receive a late notice from the IRS or DOL.
How do you file a delinquent Form 5500?
You’ll need to electronically file your complete Form 5500 immediately using the EFAST2 system. If you want to apply for DFVCP relief, check the box in Part I, Line D of the form. You can then pay the correct penalties electronically with the DFVCP online calculator15.
Are filed forms public?
Once you file Form 5500, it becomes a public record. Anyone can view submitted Form 5500s using the DOL’s search tool.16
Conclusion
Completing ERISA’s annual reporting requirements is an important but sometimes overlooked task for employers, plan sponsors, and HR professionals. Understanding which organizations are required to submit Form 5500 is essential to avoid hefty fines and ensure compliance with federal regulations.
Remember, you must use the correct form for your employee benefits plan and follow the U.S. Department of Labor’s instructions for electronic filing to avoid errors. We recommend contacting your tax advisor or CPA to help file your reports.
1. https://www.askebsa.dol.gov/FormSelector/
2. https://www.efast.dol.gov/welcome.html
13. https://www.irs.gov/pub/irs-pdf/i5500ez.pdf
