You may be aware of some obligations that come with offering health insurance and a retirement plan to your employees. But are you aware of your obligations to file Form 5500 with the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS)? Non-compliance with the Form's requirements may result in severe penalties. To avoid the cost of noncompliance, it's critical that you understand and fulfill Form 5500 requirements.

Continue reading for a brief overview of Form 5500, filing requirements, the types of Forms 5500, and important deadlines to keep in mind.

Form 5500 explained.

Thanks to a collaboration between the DOL, the IRS, and the Pension Benefit Guaranty Corporation, employee benefit plans can use the Form 5500 Series forms to meet annual reporting requirements under Title I and Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) and under the Internal Revenue Code.

The Form 5500 Series ensures that employee benefit plans are administered and managed in compliance with certain established standards, and that participants, beneficiaries, and regulators, are supplied with or have access to adequate information to protect their rights and benefits under employee benefit plans.

Who is required to file Form 5500?

Generally, all types of retirement plans subject to ERISA must file a Form 5500 for each year the plan maintains assets.

Additionally, Form 5500 must be filed by all ERISA-covered health and welfare plans that are considered funded.

As outlined by the DOL, these benefits generally include:

  • "medical, surgical, or hospital benefits
  • some employee assistance programs
  • sickness or accident benefits
  • disability benefits
  • death benefits
  • supplemental unemployment or vacation benefits
  • apprenticeship, or other training programs
  • day care centers
  • scholarship funds
  • prepaid legal services
  • severance pay
  • Life
  • prescription drug
  • Vision"

It's important to note that even small employers such as those with only two employees can file under ERISA just like any other employer, and the same rules apply.

Exceptions

There are certain exceptions based on the size, funding arrangement, and sector of a plan. The following exceptions apply to “benefits such as medical, dental, life insurance, severance pay, disability, etc.”:

  • Unfunded, fully insured, or a mix of insured and unfunded welfare plans with fewer than 100 participants at the start of the plan year (also referred to as “small” plans).
  • Welfare programs administered outside of the United States that primarily benefit non-resident aliens.
  • Governmental and church plans.
  • Only a small number of management or highly compensated employees are covered by unfunded or insured welfare programs.
  • Plans that are only kept in order to comply with workers' compensation, unemployment compensation, and disability insurance requirements.
  • Participating welfare benefit plans in a group insurance arrangement that submits a Form 5500 on behalf of the participating plans.
  • Apprenticeship or training plans that satisfy specific criteria.
  • Certain unfunded welfare benefit plans financed by dues.
  • Only the owner and/or spouse of a completely owned trade or firm, or the partners and/or spouses of partners in a partnership, have access to welfare benefit programs.

Note: For additional information, please refer to the DOL’s Health and Welfare Form 5500 Requirements report.

Which version of Form 5500 should I complete?

The size of your organization and the structure of your retirement plan will determine which version of Form 5500 you must fill out.

Let’s break it down.

1. Form 5500

Most organizations that have a plan with 100 or more participants use Form 5500, Annual Return/Report of Employee Benefit Plan.

Form 5500 is used to report information about a plan's qualification, financial condition, investments, and activities.

2. Form 5500-SF

Most organizations that have a plan with fewer than 100 participants requiring a submission use Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

Form 5500-SF is also used to report information about a plan's qualification, financial condition, investments, and activities.

3. Form 5500-EZ 

Most organizations that have a “One-participant” plan and/or a foreign plan use Form 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan.

According to the DOL, one-participant plans can no longer utilize Form 5500-SF and must instead use Form 5500-EZ beginning January 1, 2021.

Mark your calendars.

The due date for Forms 5500, 5500-SF, and 5500-EZ are “the last day of the seventh month after the plan year ends (July 31 for a calendar year plan).”

You can file for an extension using Form 5558.

For additional information, refer to the IRS Form 5500 Corner.

The cost of noncompliance.

The severity of ERISA violations increases annually. Click here to download our flyer that outlines 2021 ERISA penalties.

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Disclaimer: Please note that this is not all-inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding the specific application of the information to your own plan.