Form 5500 – Sponsors Forgetting to File Can be a Costly Mistake. A third-party service provider might handle your Form 5500 filing, and that’s fine. However, it’s still important for plan sponsors to know the timing and requirements for filing the Form 5500. Doing so can help you avoid fines and other unnecessary plan expenses. It can also help you keep tabs on your 401(k) provider to make sure they’re completing and filing the Form 5500 competently and on time, which is an important part of your fiduciary responsibility
Recently, 401(k) service provider Employee Fiduciary wrote this blog post answering FAQs about the Form 5500. Here are some of the highlights:
- Most 401(k) plans must file a Form 5500 annually to meet ERISA reporting requirements.
- The Form 5500’s purpose is to disclose plan-related information to the government and participants.
- The Form 5500 has three versions, and each has different reporting requirements – the required version is generally dependent on participant count.
- Typically, larger plans have more detailed and costly filing requirements.
- Large 401(k) plans and smaller ones that don’t meet the DOL waiver requirements must also file a full or limited-scope audit with their Form 5500.
- The Form 5500 is filed electronically.
- The filing deadline for the Form 5500 is the seventh month after the plan’s year-end (July 31 for calendar-year plans). Employers can apply for an automatic 2 1/2 month extension by filing a Form 5558 (October 15 for calendar-year plans) The Form 5558 must be filed before the due date for the Form 5500.
- Late Form 5500s are subject to IRS and DOL penalties. The late filing penalty from the IRS is $25 per day, up to a maximum of $15,000. The DOL penalty for late filing can be as much as $1,100 per day (indexed for inflation), with no maximum.
- Form 5500s filed in the past are available for public viewing.
- Form 5500 information must be disclosed to plan participants in a Summary Annual Report (SAR), which is due for distribution to participants whichever is later: nine months after the end of the plan year, or two months after the Form 5500 was due (if an IRS extension has been granted).
Not filing a Form 5500 is one of the biggest administrative mistakes 401(k) plan sponsors make. As you can see, the penalties and fees can add up, so it’s important to stay on top of the deadlines and requirements for filing this important plan document every year.
