What Is Form 5500?
Also known as the Annual Return/Report of Employee Benefit Plan, Form 5500 is a filing required annually by the Department of Labor (DOL) & Internal Revenue Service (IRS).
Form 5500 reports and discloses information on benefit plans to ensure:
- The operation and management of these plans comply with certain Titles outlined in the Employee Retirement Income Security Act of 1974 (ERISA).
- Sufficient information is provided to regulators to effectively safeguard the rights and benefits of participants and beneficiaries.
Who Is Required To File?
Plan administrators who offer employee welfare benefit plans with 100+ covered employee participants at the beginning of the plan year are required to file a Form 5500. The filing must be completed within 7 months following the close of the same plan year unless you qualify for an exemption or file Form 5558 with the IRS and receive a one-time, 2 1/2 month extension.
What Happens If We Don't File?
Complete failure or refusal to file a Form 5500 within the specified time frame may result in a civil penalty of $2,140/day, if discovered. Penalties of $50 to $300/day (max of $30,000/year) may be assessed for late or non-filers.
What If I Haven't Filed In Years?
To encourage voluntary compliance, the DOL has established the Delinquent Filer Voluntary Compliance Program (DFVCP) which drastically reduces civil penalties for plan administrators who voluntarily comply with the annual Form 5500 filing requirement. Fines are lowered to $10 per calendar day of noncompliance with a $2,000 single plan year maximum and a total cap of $4,000 per plan regardless of the number of delinquent years.
With increased DOL compliance investigations, it is imperative you discover noncompliance before the DOL or IRS in order to avoid financial penalties.
If you administer a welfare benefit plan covering 100+ employees and are unsure of whether you have filed a Form 5500 previously, contact our Form 5500 procurement partners at ABV Advisors by emailing Anne Vandeveer at firstname.lastname@example.org or contacting your Gibson representative right away.