Who is Required to File a Form 5500?

The Employee Retirement Income Security Act of 1974 (ERISA) reporting and disclosure requirements, requires administrators and plan sponsors of pension and welfare plans to file an annual return, Form 5500, with the Department of Labor’s Employee Benefits Security Administration (EBSA) which contains information about a plan’s financial conditions, investments and operations.  ERISA Section 3(3) defines the term employee benefit plan (or plan) as an employee welfare benefit plan, an employee pension benefit plan, or a plan that is both an employee welfare benefit plan and an employee pension benefit plan.

Who is Required to File?

Every pension and group welfare benefit plan that is subject to ERISA is required to file a Form 5500, with the following exceptions:

• A Welfare Benefit Plan that covered fewer than 100 participants as of the beginning of the plan year and is unfunded, fully insured, or a combination of insured and unfunded;
• An Unfunded Excess Benefit Plan is a plan maintained by an employer solely for the purpose of providing benefits in excess of the limitation on contributions and benefits imposed by Code Section 415
• A Tax-Sheltered Annuity Arrangement or Custodial Accounts
• A Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)
• A Simplified Employee Pension (SEP) or a salary reduction SEP (SARSEP)
• A Church Plans not electing ERISA Coverage
• Certain Pension Benefit Plans Maintained Outside the United States
• Unfunded Pension Plans Benefiting a Select Group (Top-Hat Plans)
• Unfunded Dues Financed Pension Benefit Plans Maintained by Unions
• An Individual Retirement Account or Annuity (IRA) not Considered a Pension Plan
• A Governmental Plan
• A “One-Participant Plan”

When is the Form 5500 Due?

The Form 5500 must be filed no later than the last day of the seventh month following the end of the plan year. For calendar year plans, those ending on December 31st, must file by July 31st.  An automatic extension of the due date for filing is available to an employer if:

1. The plan year coincides with the employer’s taxable year and
2. The employer has been granted an extension of time to file its federal income tax return to a date later than the due date for its Form 5500.

Plan sponsors can also receive a one-time extension of two and a half months by filing a Form 5558, “Application for Extension of Time to File Certain Employee Plan Returns” before the normal due date of the Form 5500.

Special Extensions of Time

The special extension box should only be checked if a plan sponsor qualifies for special extensions of time provided under presidentially declared disasters or for service in, or in support of, the Armed Forces of the United States in a combat zone.  If one of these extensions applies, check the box and enter a description citing the authority for the extension.  Check http://www.irs.gov and http://www.efast.dol.gov for announcements regarding such special extensions.

Welfare Plan Compliance

Most plan sponsors are familiar with the Form 5500 filing requirements for their retirement plan but many are not aware of the filing requirements for welfare benefit plans.  Generally, if you offer a welfare plan and have more than 100 participants at the beginning of the plan year, a Form 5500 is required.  ERISA Section 3(1) defines an employee welfare benefit plan to include:

• medical, surgical, or hospital care or benefits;
• benefits in the event of sickness, accident, disability, or death;
• unemployment;
• vacation benefits, apprenticeship or other training programs;
• day care centers, scholarship funds or prepaid legal services; and
• any benefit described in section 302(c) of the Labor Management Relations Act (other than pensions on retirement or death).

Federal law required insurance carriers to provide Schedule A disclosure information, including information on producer compensation paid, to plan sponsors on an annual basis within 120 days of the end of the policy year for use by those plan sponsors in completing their Form 5500 filings.    Insurance companies have a legal duty under ERISA and the DOL regulations to furnish plan administrators this information; failure to do so is a criminal violation.  The Schedule A now includes a section to report insurance companies that fail or refuse to provide information.  In general, insurance brokers or insurance companies provide the information,  however, they do not typically complete the returns for their clients.  If you have a welfare plan and believe you should be filing and haven’t, contact a qualified Form 5500 preparer professional to get details on the Department of Labor’s (DOLs) Delinquent Filer Voluntary Compliance Program (DFVCP).

The information contained in this article should not be considered tax or legal advice.  Plan Sponsors should always consult with their advisors for the application of the ERISA rules related to their specific situation.