What is Form 5500?

What is Form 5500?

The Form 5500 Series is a group of documents that must be filed annually by employers who sponsor employee benefit plans, to comply with requirements in the Employee Retirement Income Security Act (ERISA) and Internal Revenue Code (IRC).

The Internal Revenue Service (IRS), Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC) designed the series together. It includes several Form 5500 variations for different plan sizes and multiple accompanying schedules.

Generally, you must file a Form 5500 for each pension and welfare benefit plan you sponsor. Pension plans include 401(k) and profit-sharing plans, while welfare plans provide benefits like medical, dental, and life insurance.

Government agencies use the Form 5500 Series to facilitate several processes. Its primary purpose is to give them the data they need to verify that you’re complying with regulations and acting in your employees’ best interests.

However, it’s also a valuable source of information that can help the federal government, including Congress, assess employee benefits, tax, and economic trends. Finally, it serves as a disclosure document for plan participants and beneficiaries.

Who must file Form 5500?

Generally, if your business sponsors one or more employee benefit plans, you must file Form 5500. Which version you need to submit depends on the size and structure of your company. Here are the options and their primary eligibility requirements:

• Form 5500 – This is the most detailed version of the document. It’s required when your employee benefit plan has 100 or more participants.
• Form 5500-SF – This is a slightly streamlined version of the document. You should file it instead of the default version if your employee benefit plan has fewer than 100 participants at the start of the relevant calendar year. 
• Form 5500-EZ – This is the most simplified version of the document and is only for one-participant plans. That means you can use it only for a retirement plan that covers yourself (or you and your spouse).

Notably, a few exemptions automatically excuse you from having to file any of the Form 5500 versions, even if you have an otherwise qualifying employee benefit plan.

For example, you don’t need to complete a Form 5500 for your employee benefit plan if you’re a government entity or if it’s a one-participant account with less than $250,000 in assets under management.

For a comprehensive list of exemptions, consult the official Form 5500 Series Instructions documents.

How to file Form 5500.

You can still file many tax forms by sending paper copies through traditional mail, but most parts of the Form 5500 Series are an exception. If you file Form 5500 or Form 5500-SF, you must do so electronically.

Only with a one-participant plan that qualifies for Form 5500-EZ can you file with a paper copy by mailing it to the Department of the Treasury. However, it’s generally easier to file electronically, even when it’s not required.

To file Form 5500 Series documents electronically, you must use the dedicated web-based filing system, known as EFAST2. As of January 1, 2023, you must sign up to access it using Login.gov, which provides one user ID and password for all participating governmental agencies. If you already have EFAST2-issued credentials, they will be phased out by September 1, 2023.

When is Form 5500 due?

If you sponsor an employee benefit plan that requires you to file a Form 5500, you generally have until the last day of the seventh month after your plan year ends to submit the necessary documents.

For example, if your plan year ends on December 31, 2023, you’d have until July 31, 2024, to file the appropriate version of Form 5500 and its accompanying schedules through EFAST2.

However, you can request an extension by filing Form 5558 on or before your due date. It will push the deadline by two and a half months to the 15th day of the third month after your original due date.

If you suspect you can’t file on time, make sure you file your extension. The penalties for filing Form 5500 late are significantly higher than average, reaching up to $2,400 per day that you fail or refuse to file a complete and accurate report.