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Form 5500

Welfare Plan Form 5500 Filing Issues

March 21, 2023September 7th, 2023

What are you missing?

Many companies are unaware of the filing requirements (Form 5500) for their health and welfare plans or don’t know how to put together their filing properly. Have you missed issues such as…

Types of Employee Benefits

Are the types of benefits you provide to your employees subject to annual reporting and disclosure requirement under ERISA (Form 5500)?
Did you know that “any plan, fund, or program established or maintained by an employer or employee organization for the purpose of providing certain benefits” to its employees, former employees or beneficiaries, subject to certain exceptions, are subject to ERISA (Form 5500 filing)?

Plan Filing Requirements

What threshold must your plan reach that causes a Form 5500 filing requirement?
A health and welfare plan that has 100 or more participants enrolled as of the beginning of the plan year is required to file a Form 5500, unless it meets an exception. All welfare plans funded through a trust must file a Form 5500 regardless of the number of participants.

Exceptions to the Rule

What benefits are not required to file Form 5500?
There are some specific exceptions to the annual reporting and disclosure requirements including certain apprenticeship or training plans, government plans, church plans, federal or state workers’ compensation coverage, and plans maintained for unemployment compensation or disability insurance laws.

Plan Funding

What attachments are required for your welfare Form 5500 filing based on plan funding?

  • Fully Insured Plans: Must attach a Form 5500 and Schedules A for each insurance contract.
  • Self-Funded Plans (General Assets of the Plan Sponsor): File Form 5500 with no attachments if the benefits are paid solely out of general assets of the plan sponsor.
  • Combination Insured and Self-Funded: Must attach a Form 5500 and Schedules A for each insurance contract for the insured portion of the plan.

Plan Sponsorship

What actions by plan sponsors will cause unintended sponsorship of a plan, leading to a Form 5500 requirement?
Plan sponsors are limited to functions listed in the ERISA “Safe Harbor” regulations for voluntary plans offered to their employees. There are three basic functions allowed under the “Safe Harbor.”

  1. Employers may permit an insurer to publicize the program to employees, collect premiums through payroll deductions, and remit premiums collected to the insurer.
  2. Plan sponsors can get into trouble endorsing a voluntary plan by recommending the plan or being overenthusiastic about it. Be sure to only collect premiums through actual payroll deductions. While certain ancillary functions by the plan sponsor are allowed, limit them as much as possible and require the insurer to administer its plan.
  3. Finally, under no circumstances should premiums be collected by the use of a plan sponsor’s cafeteria plan. Allowing pretax contributions will make the plan subject to ERISA and a possible Form 5500 requirement.

 

The items above are not all-inclusive.

Compliance Failure

When should you file a Form 5500?

Plans must file the Form 5500 on or before the last day of the seventh month following the plan’s year end. An additional two and one-half months of time can be requested by filing Form 5558, Application for Extension of Time to File Certain Employee Plan Returns.

 What should you do if you discover you haven’t filed a Form 5500 or it wasn’t done properly?
Failure to file a Form 5500 when required can subject a plan sponsor to substantial penalties. The Department of Labor (DOL) offers a special program, Delinquent Filer Voluntary Compliance, (DFVC), to file with reduced penalties if the plan sponsor has not been contacted about the failure.

If you have discovered an error on your Form 5500, you should amend your return as soon as possible. It is also important that your Summary Annual Report (SAR) be amended and redistributed to your participants.

Electronic Filing

What is the electronic filing requirement, and how do you comply with it?
Starting with the 2009 form year, the DOL requires all Forms 5500 to be submitted electronically through the EFAST2  system. The submission can be accomplished using the DOL’s IFILE system, or through the use of approved third-party vendor software. 5500Tax Group employs third party software that allows you to review and sign your return on our user portal. It is necessary to obtain signature credentials with the DOL  in order to sign a return.

BONUS FORM 5500 TIP:

Please note that while the Internal Revenue Service (IRS) no longer requires a Form 5500 filing for Section 125 – Cafeteria Plans, if you have a Flexible Spending Account or Medical Reimbursement Feature associated with your plan and more than 100 employees participate in the reimbursement feature, the DOL will require that you file Form 5500.

Final Note: The information provided above is a brief discussion of the general rules. If you would like a professional to analyze your plans, funds and programs for annual reporting and disclosure requirements under ERISA (Form 5500), please call or Email 5500 Tax Group to discuss your specific situation.

S Herrle-Henderson Brothers, Inc.

Ann Myers has been a trusted advisor and our Form 5500 filing partner for well over 15 years.   As leading experts in the Employee Benefits industry with a significant number of local and national clients, we rely heavily on Ann to prepare a large number of health and welfare 5500 forms every year for our clients.   Regardless of whether she is providing guidance for a client that is filing for the first time, suggesting changes on what should be reported in a 5500 form, providing strategy to remedy a noncompliant plan, or walking an employer through the DFVCP filing process, we know our clients are receiving the best advice from one of the most knowledgeable experts in the industry.

W Wang-L&W Infoserve Co.

In June 2022, we received IRS notices with huge penalties (~$200K) as they didn’t receive F5500 – Annual Report of Employee Benefit Plan for 2019 and 2020 for our S Corporation.  We immediately started working with Amy Boyd from 5500 Tax Group.  Amy answered our questions with great patience, provided clear guidance and took appropriate actions on communicating with IRS.  With a lot of time and effort, she helped us resolve this issue that gave us so much stress.  We are grateful for her assistance and highly recommend her services.  She is professional, efficient, and friendly.

E Powell-Seubert & Associates, Inc.

Ann at 5500 Tax Group has been a great partner for the past twelve plus years.  We find the process in working with 5500 Tax Group for client Form 5500 filing requirements has been simple, efficient, and timely. Ann has been particularly helpful in guiding mutual clients through the Department of Labor Delinquent Filer Voluntary Compliance Program (DFVCP) with an easily understood step-by-step explanation for all parties involved. We look forward to working with Ann for many years to come.

M Fair-USI Insurance Services

Our team has worked with Ann Myers and the 5500 Tax Group for many years. Ann makes the whole 5500 process as painless as possible and personally engages with each client. We have continued to use Ann for the “personal” touch and level of details that Ann brings to her work. Our team has 100% confidence in Ann executing on filings, details and deadline. Ann brings a positive attitude, years of experience and her expertise to every engagement. Our client and team enjoy working with Ann and USI would absolutely serve as a reference.

A Cox-Wabtec

Wabtec has worked with Ann Myers of the 5500Tax Group, Inc. for the past 15 years.  She manages all of the details for our 5500 preparation.  She prepares the 5500s for our Pension Plan, Savings Plan, and various Health and Welfare plans.  She also completes the PCORI filings and Summary Annual Reports.  All is done efficiently, effectively, and reasonably priced.  Ann coordinates with our auditors, record keepers, and our ERISA attorneys to gather all required information and get any answers required.  Definitely recommend!

Briones, Briones International

Amy, Thank you for years of extremely knowledge and professional guidance regarding retirement plans including the filing of form 5500.  You have made the myriad of IRS regulations and alphabet soup understandable for a civilian. I am truly grateful for your patience and never hesitating to answer dumb questions.  Any client seeking your guidance and advice will be beyond pleased with your services.