Form 5500 (Retirement Plans)

Relevance of Plan Size on Filing

All retirement plans that are subject to ERISA are required to file a Form 5500, regardless of plan size. The plan size does, however, affect what schedules and reports must be filed with the Form 5500.

Plan size is defined as follows:

Large Plan: a retirement plan that covers 100 or more participants on the first day of the plan year. A person is “covered” if he or she is eligible to make elective deferrals to the plan.

Small Plan: a retirement plan that covers fewer than 100 participants on the first day of the plan year.

• 80/20 Participant Rule/Exception: If the number of plan participants on the first day of the plan year is between 80 and 120, then the filer (plan sponsor or plan administrator) may elect to complete the current year Form 5500 in the same manner as it did for the previous plan year (for example, if the plan administrator filed as a small plan during the prior year, it may also file as a small plan during the current year.)
• Short Plan Year Rule: If the plan had a short plan year of seven (7) months or less for either the prior plan year or the plan year being reported on the 2016 Form 5500, an election can be made to defer filing the audit report.

Whether the filer is a large plan or a small plan determines many of the required schedules and attachments that must accompany the Form 5500.  Two major examples appear below:

• Large Plan filers must file Schedule H and also must file an audit report prepared by an “independent qualified public accountant” (“IQPA”) that examines the plan’s financial statements (and other records) to determine the financial status of the plan. The audit also generally reviews the required attachments to the Form 5500. (The audit report is sometimes referred to as the “IQPA’s Opinion.”)
• Small Plan filers may be able to file Form 5500-SF instead of the longer Form 5500 if certain criteria are met:
  • The plan is not required to file the audit report (IQPA Opinion) referred to above (in other words, it meets the audit requirement exemption);
  • The plan does not hold any employer securities as plan investments;
  • The plan is not a multi-employer plan (union); and
  • The plan has had one hundred (100) percent of its certain, secure investments with a readily determinable fair market value. ]

Required Electronic Filing of Form 5500

All Form 5500 filings (except Form 5500-EZ filings for one-participant plans) must be filed electronically with the Department of Labor, using the EFAST2 system. Generally stated, this means:

• The person(s) who sign(s) the Form 5500 must register for electronic signer credentials (this includes a User ID and PIN) with the DOL using their EFAST2 system. This is a one-time registration requirement.
• Once obtained, the EFAST2 electronic signer credentials will be used to electronically sign the Form 5500 filings. The Form 5500 can be prepared using the DOL’s I-FILE system, or by using an approved third-party software program that complies with EFAST2 requirements.
• The EFAST2 system is intended for government (DOL) use only.
• As a plan sponsor or plan administrator, you are also required to print, sign and maintain a hard-copy of the Form 5500 (with original signatures on each of the pages which require a signature) in your permanent plan files for each year.
• Additional electronic filing credentials (filing author, transmitter, etc.) can be obtained from the EFAST2 system, if necessary and/or applicable.

For general information regarding the electronic filing requirements, see the DOL’s ”FAQs on EFAST2 Electronic Filing System”. You can also visit the DOL website.

Schedules Which May be Required

Below is a list of the various schedules that may need to be included as part of a Form 5500 filing. The type of plan involved generally determines which schedules are required. Please be sure to check with your Form 5500 preparer or legal counsel to confirm which schedules may need to be attached to your Form 5500 filling:

• Schedule A – Insurance Information.  Schedule A generally applies if any benefits under an employee benefit plan are provided by an insurance company, insurance service, or other similar organization.  (This usually does not apply to 401(k) plans.)
• Schedule C – Service Provider Information.  Schedule C must be completed if the plan is a large plan, or if a service provider was paid $5,000 or more in compensation, directly or indirectly from the plan.  Schedule C is also required if an accountant or enrolled actuary was terminated during the reporting year.

Schedule C is NOT required for payments made by the employer for plan-related expenses. Schedule C is required only when payments are made from the plan itself.

• Schedule D – DFE/Participating Plan Information. Schedule D is used to report information about direct filing entities (DFEs) and participating plans, if applicable.
• Schedule G – Financial Schedules. Schedule G generally must be completed if the plan is a large plan and answers “yes” to certain questions on Schedule H.
• Schedule H – Financial Information (for Large Plans). Schedule H must be completed for large plans (100 or more participants on the first day of the plan year). If a Schedule H is completed and attached to Form 5500, then the independent qualified public accountant (“IQPA”)’s opinion, or audit report, must also be attached to the Form 5500 filing.
• Schedule I – Financial Information (for Small Plans). Schedule I must be completed for small benefit plans (fewer than 100 participants on first day of plan year).
• Schedule MB, SB; Schedule R – Do not apply to 401(k) plans.

Related Forms Which May be Required

In addition to the above schedules, the forms listed below are related to the Form 5500 series and may or may not be required to be filed, depending upon your circumstances (here again, please consult with your Form 5500 preparer and/or legal counsel to confirm which forms may apply to you):

• Form 8955-SSA (formerly Schedule SSA). Form 8955-SSA is now separately filed with the Internal Revenue Service and is described here.
• Form 5500-EZ. Form 5500-EZ is used for reporting for one participant retirement plans (both owners and spouses). It is not filed with the DOL on the EFAST2 system; instead, it is filed on paper with the Internal Revenue Service.
• Form 5500-SF. As mentioned previously, Form 5500-SF was created to provide for simplified reporting for small plans (fewer than 100 participants). “SF” stands for short form. It can be also filed by a one participant plan, instead of using the Form 5500-EZ, if the specific Form 5500-SF requirements are satisfied (including filing by using EFAST2).
• Form 5558. Form 5558, “Application of Extension of Time to File Certain Employee Plan Returns,” can be used to request an automatic extension to file Form 5500 for up to 2 1/2 months.

Correction Program for Late Filings

If a plan administrator fails to make a timely Form 5500 filing (other than a Form 5500-EZ for a one-participant plan), the Plan Administrator should file the delinquent return as soon as possible using the DOL Delinquent Filer Voluntary Correction Program (“DFVCP”).

The DOL has posted Frequently Asked Questions which provide details about the DFVCP.

Note that it is only possible to correct late or missing Form 5500 filings before the failure is noticed by the DOL – for example, upon audit – and the plan sponsor is notified in writing.

When Late Form 5500 Filings are Corrected Using DFVCP: If one or more Form 5500 returns (other than a Form 5500-EZ for a one-participant plan) are filed using the DFVCP before the DOL notifies the Plan Administrator in writing of the missing Form 5500 filing, the only DOL fees that will be applied will be the fees specified under the DFVCP program.

The fee under the DFVCP is generally $10 per day late (with a cap ranging from $750 to $2,000 per late filing — $4,000 for certain large plans). This amount is significantly less expensive than the penalties which could be imposed if the DOL notifies the plan administrator of a late Form 5500 filing before it is corrected under DFVCP.

Although the DOL program specifically applies to DOL penalties, the IRS has taken the position that it will not pursue its own late filing penalties if the DFVCP program is used, provide that certain conditions are met. These conditions include a separate filing with the IRS on Form 8955-SSA to report any participants who terminated employment during the plan year with vested benefits that had not been distributed before the end of the plan year.

When the DOL Notifies the Plan Administrator of the Late Form 5500 Filing: If the Plan Administrator is notified in writing by the DOL of a failure to file a timely Form 5500 before the failure is corrected by filing under the DFVCP, the DOL penalty for late filing can run up to $2,400 per day (for 2023, this amount is subject to cost-of-living increases), with no maximum, and the plan administrator cannot use the DFVCP to reduce the fee.

Avoiding Late Form 5500 Filings. To help avoid late Form 5500 filings, it is important to:

• Understand that the plan administrator has the responsibility (and the liability!) for ensuring that the return is filed timely;
• Designate an identified person, or outside service provider, as the responsible person for timely filing the return;
• Use a calendar (tickler system) that notes the deadline for filing the return well in advance, so as to permit plenty of time for gathering and processing all necessary data; and
• Implement a communication mechanism to alert the plan administrator and any outside service providers of the upcoming deadline to file, including necessary lead time required for information and data gathering.

Special Rules for Form 5500-EZ filings

Because most Form 5500 filings are filed via EFAST2, most notifications of late filing originate from the DOL.  However, Form 5500-EZ filings (which are filed for one-participant plans with assets that exceed $250,000) are filed with the IRS using a paper form and are not eligible for DFVCP or electronic filing with the DOL. This is because the plans are not subject to Title I of ERISA.

The IRS released guidance in 2015 that establishes a permanent penalty relief program for Form 5500-EZ filers. The IRS penalty relief program allows late Form 5500-EZ filings to be made with the IRS, provided that the plan administrator has not already received a late filing notice from the IRS in which a penalty has been assessed.