Form 5500: all you need to know

What is the Form 5500? If you want to understand what it takes to file Form 5500, here are the top six things you need to know. Let’s get started. 

What is the Form 5500?

It is a tax form that is very similar to other tax forms that you may be familiar with. It provides the information to both the Internal Revenue Service (IRS), the Department of Labor (DOL), and the Pension Benefit Guaranty Corporation (PBGC).
The 5500 form (also called Annual Return/Report of Employee Benefit Plan) was developed for employee benefit plans to meet annual reporting requirements under the Employee Income Security Act (ERISA).
The act, in its turn, establishes important standards for retirement, health, and other welfare benefit plans to protect the interests of both the employee and the employer.
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Why is this topic important?

1. This is a key compliance requirement for many large employers sponsoring health, welfare, and retirement plans.
2. Penalties are substantial for late or omitted filings. 

Form 5500 filing requirements

1. Who is filing the 5500 on your company’s behalf?

As a rule, the plan administrators (also called fiduciaries) are responsible for filing it. However, this can also be done by the HR, finance, operations department, or even a combination of the three.

1. Must all companies file the 5500 form?

Before an organization starts the filing process, it is crucial to figure out which form to file. 

1. If a company has a hundred or more participants enrolled in coverage, then they will need to file Form 5500 for their health and benefit plans. 
2. If a company has fewer than a hundred plan participants, they fill out the form called 5500-SF (short form).
3. For plans maintained outside the United States or those that have a one-participant plan, there is another version of the form — 5500-EZ.
4. There are a few entities that are exempt from filing 5500. These include churches and government entities.

What is the Form 5500 due date?

It is important to file the form by a certain due date or ask for an extension. Otherwise, late fees and penalties will be applied.
The original due date for the 5500 is seven months after the end of your plan year. For most plans, it is going to be from the 1st of January. That means that the original 5500 filing date is July 31st for a calendar year plan.
So, you have to submit your employee benefits report by midnight of the due date. In case the Department of Labor doesn’t receive it on time  through no fault of yours, it is recommended to print the unsuccessful submission notice and include it with the resubmitted annual return report, tagged as an “Other Attachment.”
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However, remember that you still may be penalized for late filing, depending on the reason why your original submission was unsuccessful.
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Bear in mind that two and a half month-extensions available for employers that need additional time. We are going to talk about it later in this article.

Form 5500 instructions

So, how does one file Form 5500?
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1. Because the Department of Labor no longer accepts paper filings and requires electronic form 5500 filing using its special system, you need to create an account first. Or you can make your life easier and choose a dedicated service to prepare and submit your documents.
2. Give all the required details such as your name, information about plan sponsors, plan administrator information, how the plan is funded, benefits provided, etc. 
3. Complete the required form 5500 schedules:

Schedule A - Insurance info
‍Schedule C - Service provider info
‍Schedule D - DFE/Participating plan info
‍Schedule G - Financial schedules
‍Schedule H - Financial info
‍Schedule I - Financial info (for a small plan)
‍Schedule MB - Actuarial info (multi-employer defined benefit plan & certain money purchase plan)
‍Schedule R - Retirement plan info
‍Schedule SB - Actuarial info (single-employer defined benefit plan).
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After completing all the above schedules, be sure to attach them to your submission as .pdf files and tag them in your electronic filing as “Other Attachments.”

1. Sign your 5500 series filing with a valid electronic signature.
2. Double-check and submit Form 5500 by the deadline.

Common Form 5500 errors

Everyone makes mistakes, but this can cost you a lot when it comes to Form 5500 filing. Below are the most common mistakes in Form 5500 preparation to pay attention to:

1. Providing incorrect information (for example, incorrect number of benefit plan participants);
2. Providing excessive and unnecessary information (for example, returns dated over twelve months);
3. Failure to file for an eligible plan, including omitted insurance schedules or ERISA benefits;
4. Leaving some fields blank;
5. Using the same benefit plan number for a few plans;
6. Late filings without extensions;
7. Filing single 5500 without consolidated Wrap SPD in place.

As you can see, the annual return report (Form 5500) requires a significant amount of information. And it’s easy to type in wrong codes or make any other mistake. To avoid penalties for plan sponsors, be sure to double-check all the codes and fill out the annual return report afresh instead of copying and pasting text from the last year.

Form 5500 extension options

As we already mentioned, there are penalties foreseen for late filers. The Internal Revenue Service will charge you $25 for each day, up to a maximum of $15k. And the Department of Labor will charge you up to $1.1k for each day, with no maximum. So don’t plan everything for the last day.
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However, you should keep in mind that two and a half month-extensions available for employers that need additional time.
For example, if you had to submit your form till the last day of July, the extension would give you some extra time to file your form until October 15th.
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The extension doesn’t cost you extra. To require extensions of deadlines, you need to fill out Form 5588 (Application for Extension of Time To File Certain Employee Plan Returns).

Final words

It is almost the end of winter already, and in less than seven months, the deadline for filing the employee benefits Form 5500 will come up. This is an annual report filed with the Department of Labor (DOL).
The 5500 series provides the Internal Revenue Service and the DOL all the essential information about an employer’s compliance with regulations set by the government.
 
If a company has a hundred or more participants enrolled in coverage, then they will need to file Form 5500 for their health and benefit plans. 
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Filing employee benefits Form 5500 can be a pain. But fortunately, everything can be done online these days. Some 5500 forms require an audit by an outside accounting firm. Dedicated tools like Tabulera can help put everything together.