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Navigating Form 5500 for Employee Benefits

Your guide to tackling Form 5500 like a pro

Blog Author - Keertana Anandraj
Keertana Anandraj
Mar 21, 20245 minutes
Blog Author - Keertana Anandraj
Keertana Anandraj

Keertana Anandraj is a part-time freelance writer and full-time sustainability analyst. Before Justworks, she began her freelance career writing for The Financial Diet and Career Contessa. She currently resides in New York City.

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If you are an employer who offers a retirement or welfare benefit plan to your employees, you may have heard of Form 5500. But what exactly is Form 5500, and why is it important? In this comprehensive guide, we will break down everything you need to know about Form 5500, including what it is, who needs to file it, and how to file it correctly.

What is Form 5500?

First things first, let's tackle the big question: what exactly is Form 5500? Well, think of it as your business's annual report card for retirement and welfare benefit plans. Form 5500 is an annual report that must be filed with the Department of Labor (DOL) and the Internal Revenue Service (IRS) by employers who offer retirement or welfare benefit plans to their employees. This form is used to provide information about the plan, its operations, and its financial condition.

What is a Retirement or Welfare Benefit Plan?

Simply put, they're programs that provide benefits to your employees, such as retirement savings accounts (like 401(k) plans) or health insurance coverage. If you offer any of these plans to your employees, chances are you'll need to file Form 5500.

Retirement plans include 401(k), 403(b), and pension plans, while welfare benefit plans include health insurance, dental insurance, vision insurance, life insurance, and disability insurance plans (both short-term and long-term).

Who Needs to File Form 5500?

Generally speaking, if your business sponsors a retirement or welfare benefit plan with 100 or more participants, you're required to file. But even if you have fewer than 100 participants, you may still need to file if you're part of a multiple employer plan or if you meet certain other criteria. 

The following types of employers are required to file this form:

  • Employers who offer a retirement or welfare benefit plan to their employees

  • Employers who have 100 or more employees

  • Employers who have fewer than 100 employees but are part of a group of employers that collectively have 100 or more employees

If you are unsure whether you are required to file Form 5500, you can use the DOL's online tool, the Form 5500 Filing Requirement Advisor, to determine your filing requirements.

What if I Have Multiple Plans?

Ah, the age-old question: what if you have multiple benefit plans? Not to worry! You'll still need to file Form 5500 for each plan separately. That means if you offer both a retirement plan and a health insurance plan, you'll need to file a separate Form 5500 for each.

But, you may be able to file a single Form 5500 for all of them. This is known as a "consolidated filing" and can save you time and effort. However, there are certain requirements that must be met in order to file a consolidated Form 5500, so it is important to consult with a professional if you are considering this option.

How to File Form 5500

Form 5500 must be filed electronically using the DOL's EFAST2 system. This system allows employers to file their Form 5500, along with any required schedules and attachments, online.

When is Form 5500 Due?

Form 5500 must be filed by the last day of the seventh month after the end of the plan year. For example, if your plan year ends on December 31st, your Form 5500 must be filed by July 31st of the following year. If your benefit plan year is different from the calendar year, i.e. November 1 - October 31, your Form 5500 must be filed by May 31st of the following year. 

If you are unable to file by the deadline, you can request an extension by filing Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. This form must be filed by the original due date of your Form 5500 and will give you an additional 2.5 months to file (October 15 if your benefits plan follows the calendar year and August 15 if otherwise).

What Information is Required on Form 5500?

Form 5500 is a comprehensive form that requires a significant amount of information about your retirement or welfare benefit plan. Some of the information that is required includes:

  • Basics: plan name, plan number, and plan year

  • Plan Sponsor: employer's name, address, and employee identification number (EIN)

  • Plan Administrator: name, address, and EIN

  • Financial Condition: assets, liabilities, and income

  • Plan’s Operations: contributions, distributions, and fees

  • Plan’s Participants: number of participants and their demographics

  • Compliance: adherence to ERISA regulations

Common Mistakes to Avoid When Filing Form 5500

Filing Form 5500 can be a complex and time-consuming process, and there are several common mistakes that employers make when filing this form. Some of these mistakes include:

Filing the Wrong Form

There are several different versions of Form 5500, and it is important to make sure you are filing the correct one for your plan. The most common versions of Form 5500 are:

  • Form 5500: This is the basic form that is used for most retirement and welfare benefit plans.

  • Form 5500-SF: This is a simplified version of Form 5500 that can be used by small plans with fewer than 100 participants.

  • Form 5500-EZ: This form is used by one-participant plans, such as solo 401(k) plans.

Failing to File on Time

As mentioned earlier, Form 5500 must be filed by the last day of the seventh month after the end of the plan year. Failing to file on time can result in penalties so it is important to make sure you file by the deadline or request an extension if needed.

Not Including All Required Schedules and Attachments

In addition to the main Form 5500, there are several schedules and attachments that may be required depending on the type of plan you have. It is important to make sure you include all required schedules and attachments when filing your Form 5500 to avoid delays or penalties.

Inaccurate or Incomplete Information

Providing inaccurate or incomplete information on Form 5500 can lead to discrepancies and potential audits by regulatory authorities. Double-check all data entered on the form, including participant counts, financial information, and compliance details. 

Ignoring Changes in Reporting Requirements

Form 5500 reporting requirements can change over time due to updates in regulations or guidance from regulatory authorities. Failing to stay informed about these changes can lead to non-compliance and potential penalties. Regularly review updates from the IRS, the Department of Labor, or your plan administrator to ensure you're aware of any changes that may impact your filing obligations.

Lack of Documentation Retention

Failing to retain documentation related to Form 5500 can pose problems if you're ever subject to an audit or investigation. Keep thorough records of all information submitted with your filing, including schedules, attachments, and supporting documentation. Maintaining organized records will help you respond promptly to any inquiries and demonstrate compliance with reporting requirements.

How Justworks Can Help

While it’s always best to consult with a tax professional if you need assistance with the process of filing your Form 5500, a Professional Employer Organization (PEO) like Justworks can also help. Justworks provides ongoing support with compliance, staying up-to-date with changes in reporting requirements, and even files your Form 5500 so you don’t have to. Learn more about how Justworks can help your small business with tax compliance, benefits, and more.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.
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Written By
Blog Author - Keertana Anandraj
Keertana Anandraj
Mar 21, 20245 minutes

Keertana Anandraj is a part-time freelance writer and full-time sustainability analyst. Before Justworks, she began her freelance career writing for The Financial Diet and Career Contessa. She currently resides in New York City.

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