The Employer’s Guide to Form 5500

What is Form 5500 and Who Needs to File it?

Form 5500 is an annual report that contains information about a company’s benefits, including retirement, welfare benefit plans (health, life, dental), fully-insured, and self-funded plans. Employers are required to file Form 5500 with the Department of Labor (DOL) when their plan has 100 or more employee participants at the beginning of a plan year and when their plan is funded through a trust, regardless of the number of participants. Government entities and church groups are exempt from Form 5500 filing.

Form 5500 Filing Deadline

Form 5500 is due on the last day of the seventh month after the plan year has ended. For example, if a plan has an effective date of January 1, then Form 5500 must be filed by July 31 (or the Monday after if July 31 falls on a weekend). 

Know the Risks: Penalties for Failure to File Form 5500

• Up to $2,400 per day against plan administrators if deficient, late, or unfiled
• Serious and willful attempts to avoid Form 5500 filing can even result in criminal penalties
• Rejected form 5500s are treated as not filed, and subject to penalty assessment by the DOL

Options for Extensions or Late Filings

There may be instances when an employer misses the Form 5500 filing deadline. Depending on the situation, employers have a few options. 

1. File for an extension before the deadline

Employers can request an extension if they know they will miss the deadline ahead of time. This can be done by filing IRS Form 5558 for each ERISA plan subject to Form 5500 filing. If the Form 5558 is not postmarked by the original due date, the IRS may reject it. Employers who are granted an extension must file Form 5500 by the extension deadline to avoid a $50 per day penalty retroactive to the original Form 5500 deadline.

2. File Form 5500 after original deadline with no extension request

Employers can file Form 5500 late. However, if the DOL notices the late filing, this may incur a penalty of $50 per day per plan per plan year that is filed late. The DOL may currently assess a total penalty of up to $2,400 per day.

3. File late under the Delinquent Filers Voluntary Compliance Program (DFVCP)

Alternatively, before the late filing is discovered by the DOL, the employer can proactively file late under the Delinquent Filers Voluntary Compliance Program (DFVCP), under which the penalties are reduced to $10/day per plan per plan year. If an employer has not filed Form 5500 for previous years and has not received a notification from the DOL, they should file and enter the DFVCP as soon as possible. To put this into perspective, a plan that should have been filed three years ago has a maximum penalty of $2,344,584, whereas if the employer uses the DFVCP, this penalty is $2,000 per year, capped at $4,000 total. 

Form 5500 FAQs

When is Form 5500 required?

When a plan has 100 or more employee participants at the beginning of a plan year and also when a plan is funded through a trust, regardless of the number of participants.

Who is exempt? 

Government entities and church groups are exempt from Form 5500 filing. 

When is Form 5500 due?

Form 5500 is due on the last day of the seventh month following the plan year. A one-time, 2 1/2 month extension can be requested by filing Form 5558.

How do you determine how many welfare plans you have?

You must review the governing documents and actual operation to determine whether welfare benefits are being provided under a single plan or separate plans. In the absence of a wrap plan document, usually the number of separate insurance contracts determines the number of plans.

Does my Cafeteria Plan have to file Form 5500?

In 2002 the IRS indefinitely suspended the requirement that employers file an annual Schedule F and Form 5500 for fringe benefits plans (including cafeteria plans). This suspension didn’t affect other schedules or other information that employers subject to ERISA may have to include in the annual Form 5500 filing. For example, though an employer doesn’t have to file anything for its cafeteria (pre-tax premium conversion) plan, it still may have to file a Form 5500 for a medical plan (including health FSA) if it is funded through a cafeteria plan.

What Form 5500 attachments are required?

Insured benefits are required to attach a Schedule A for each contract. For more details, please refer to the question below, “What does “funded” and “unfunded” mean in terms of Form 5500 filing requirements?”

What are the penalties for late or non-filers?

For late filers, the penalty is $50 per day late with no limit. For non-filers, the penalty is up to $30,000 per plan per year until the Form 5500 is filed. The DFVC Program can be used to reduce penalties, but not if the DOL has notified the plan sponsor that the filing is late or has not been received.

What does “funded” and “unfunded” mean in terms of Form 5500 filing requirements?

Most single employer welfare plans are “unfunded.” This term is properly applied where benefits are paid from the general assets of the employer and not from any trust or other fund. Unfunded plans do not require audits. These plans often require a complete Form 5500 and also may need Schedules A. A Form 5500 does not have to be filed for a welfare benefit plan that covers fewer than 100 participants as of the beginning of the plan year and is unfunded, fully-insured, or a combination of insured and unfunded.

Some welfare plans are “funded.” Benefits paid from a trust are typically referred to as “funded” or “trust-funded.” A welfare plan that is funded typically uses a Code section 501(c)(9) VEBA trust or other type of trust. These plans often require a complete Form 5500 with an opinion and report of an independent accountant, and also may need Schedules A, C, and H or I.