What is Form 5500

Form 5500 is an annual report that provides the government with detailed information about the financial conditions, investments, and operations of a company’s benefits plans.

It is completed by employers who sponsor employee benefit plans, including pension and welfare benefits. It’s intended to ensure compliance with federal regulations and protect the interests of participants and beneficiaries.

The form must be filed with the Department of Labor (DOL), Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC). The return of this form is mandated by the Employee Retirement Income Security Act (ERISA) and the IRS’s Internal Revenue Code.

What is Form 5500 used for?

Form 5500 has several purposes, including:

• Providing the government with information about the financial status and operations of employee benefit plans
• Ensuring employee benefit plans are managed and operated according to federal regulations
• Protecting the interests of plan participants and beneficiaries by ensuring transparency and accountability

They are also useful in helping employers analyze their pension and benefits schemes.

Who is required to file Form 5500?

You are required to file Form 5500 if you are an employer who sponsors employee benefit plans subject to the Employee Retirement Income Security Act (ERISA). This includes:

• Pension plans
• Profit-sharing plans
• Welfare benefit plans such as health insurance, life insurance, and disability insurance plans

Church plans and government plans are exempt from fulfilling Form 5500 filing requirements. Plans designed to comply with unemployment, worker’s compensation, or disability laws are also exempt. 

Lastly, plans maintained outside the US that primarily benefit non-US citizens are also exempt.

When is Form 5500 due?

Form 5500 is due by the last day of the seventh month after the plan year ends. For instance, if the plan year ends on December 31, the form is due by July 31 of the following year.

Extensions can be obtained by filing Form 5558, which grants an additional 2.5 months to file.

What information is required on Form 5500?

Form 5500 requires detailed information about the plan, including:

1. The plan's financial condition
2. Investments and operations
3. Assets and liabilities
4. Income and expenses
5. Information about plan participants

Schedules and attachments may also be required to provide additional details.

What are the different types of Form 5500?

There are three main types of Form 5500, as listed on the IRS website:

• Form 5500: The standard form used by large plans and some small plans
• Form 5500-SF: A simplified version for small plans (fewer than 100 participants) that meet certain criteria
• Form 5500-EZ: For one-participant plans or plans covering only the owner and their spouse

What are the penalties for not filing Form 5500?

Failing to file Form 5500 can result in significant penalties. For instance, there is a DOL penalty of up to $2,586 USD per day (at the time of writing) for each day the form is late.

Additional penalties from the IRS may also be applied. These penalties can accumulate quickly, making timely and accurate filing essential.

How can businesses ensure compliance with Form 5500 requirements?

To ensure compliance with Form 5500 requirements:

• Maintain accurate and up-to-date records of employee benefit plans
• Regularly review plan operations
• Partner with knowledgeable HR and payroll professionals (such as Deel) or third-party administrators (TPAs) to prepare and file the form
• Utilize specialized software to streamline the filing process

How does Form 5500 interact with other compliance requirements?

Form 5500 interacts with various other compliance requirements, including:

• ERISA regulations: Federal rules governing the administration, reporting, and fiduciary responsibilities of employee benefit plans, ensuring protection for participants and beneficiaries
• IRS requirements: Mandate the reporting, taxation, and compliance obligations for employee benefit plans, including contributions, distributions, and annual filings to maintain tax-favored status
• PBGC requirements: Including the protection of pension benefits in private sector defined benefit plans, including premium payments, reporting, and adherence to funding rules to ensure plan solvency
• Affordable Care Act (ACA) requirements for health plans: Such as coverage standards, preventive services, prohibitions on pre-existing condition exclusions, and essential health benefits provision

Ensuring consistent and accurate filings across these requirements is crucial for maintaining compliance and avoiding penalties. 

Can Form 5500 be amended after filing?

Yes, you can amend Form 5500 after filing to correct errors or omissions. To amend, simply file an amended form as soon as the need for correction is identified. Include all required schedules and attachments, even if they were not affected by the amendment.

What are the common challenges in preparing Form 5500?

Some of the trickier aspects of preparing and filing Form 5500 include:

• Gathering accurate financial data
• Ensuring all required schedules and attachments are included
• Understanding complex regulations governing employee benefit plans

Collaborating with experienced professionals and utilizing specialized software can help mitigate these challenges.

How can technology assist in filing Form 5500?

Technology can assist in filing Form 5500 by:

• Automating data collection, while missing nothing vital
• Ensuring accurate calculations, without human errors
• Providing reminders for filing deadlines, so you don’t miss deadlines
• Generating necessary schedules and attachments automatically
• Streamlining the review process, making interpretation easier

Using a benefits administration platform like Deel’s can turn your annual Form 5500 filing into a process that helps you understand and optimize your employee benefits program. What was previously an onerous requirement can provide useful insights and opportunities for improvement.

How to facilitate electronic filing with the DOL's EFAST2 system

The Department of Labor has created an online portal for simplified 5500 compliance. You must register for an EFAST2 account to use their filing service, IFILE.

This portal also permits the filing of 5558 (applications for a one-time extension for 5500 filing) and PR forms for individual pooled plan providers.

How can Deel assist with Form 5500 Filing?

Deel PEO enables you to offload compliance risks and HR admin—including state tax compliance—so you can focus on scaling your business across all 50 states and beyond.

By leveraging Deel's expertise, businesses can streamline their compliance processes and reduce the risk of penalties.

Request a Deel platform demo today.

Disclaimer: This content is for informational purposes only and is not intended as tax or legal advice. The information provided is correct as of the original publication date.