Each year employee benefit plan administrators are required to report on the financial condition, investments and operations of their employee benefit plans. Failure to file the return can result in a maximum penalty of $2,140 per day for each day late.
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 in order to streamline the process for employers.
As many employers approach the deadline for filing, the following Q&A should help clarify plan administrator responsibilities and ensure compliance.
The Form 5500 series is intended to protect the rights and benefits of plan participants and beneficiaries by ensuring that:
Plan administrators (employers) operating health and welfare plans with more than 100 employee participants on the first day of the plan year must file a Form 5500 with the Department of Labor (DOL) each year.
If a health and welfare plan meets any of the following criteria it is not required to file a Form 5500:
In order for a health and welfare benefit to exist there must be a plan, fund or program established or maintained by the employer for the purpose of providing one or more of the following benefits:
Dependents covered under the health and welfare plan, such as spouses and children are not considered participants for the purpose of the 5500 filing.
Unlike retirement plans, when it comes to health and welfare plans the term “participant” refers only to those employees actually enrolled in the plan versus all of those eligible to be covered.
Yes. Instead of filing a form 5500 for each individual plan with more than 100 participants, employers can use a “wrap” document to pull all employee benefits into a single plan in order to reduce the number of Form 5500 filings required.
The wrap document does not take the place of other plan documents (such as the cafeteria plan document), it simply “wraps” all of the other documents into one plan allowing all benefits to be reported within a single Form 5500 filing.
The form 5500 is due seven (7) months after the end of the plan year. For example – if your plan year ends on December 31st, then your 5500 is due July 31st of the following year.
Beginning January 1st, 2010 the DOL requires all 5500s to be filed electronically using their proprietary EFAST2 system.
An employer who needs additional time to complete the 5500 can file a Form 5558 for a 2-1/2-month extension. The deadline for Form 5558 is any time before the original Form 5500 is due.
Yes. Many benefit broker/consultants work with professional accounting firms to deliver these services to their clients at no charge. If not, here’s the ballpark of what employers can expect to pay:
Further guidance and information regarding form 5500 including
can be found by visiting:
Joanna Morrow is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU). Joanna is a senior partner at Arizona Benefit Consultants in Phoenix.