IRS Form 5500 is a form many employers must file annually to provide information on their employer-sponsored retirement plans. 401(k) plan sponsors often use third-party administrators for plan compliance issues including filing Form 5500 while some handle it themselves. It’s important that accurate filings be submitted on time to avoid penalties or plan disqualification.
If you want to work with a 401(k) company that can make preparing and submitting your Form 5500 easy, we recommend ShareBuilder 401k. Their advisors and customer success managers will help you determine the right plan design, answer all of your 401(k) questions and make sure that your plan remains compliant. Get started at ShareBuilder 401k.
Form 5500 Free Checklist Downloads
We’ve created checklists to help you make sure that your Form 5500 is correct and filed on time. The first step in preparing to submit your IRS Form 5500 is downloading and reviewing. If you don’t yet have a copy of IRS Form 5500, you can download a free copy directly from the IRS website for your review.
One of the first things to do once you’ve downloaded your copy of IRS Form 5500 is to check the instructions and make sure that you are required to file the form. Certain types of retirement plans are exempt from filing a 5500 or, if you have fewer than 100 employees, you may be eligible to file a Form 5500 alternative that could be far easier.
Form 5500 Do-it-Yourself Free Checklist
A 401(k) plan sponsor who is preparing and submitting their own 5500 must gather many items of information on their company and their plan. Be sure to work through this extensive checklist to make sure that all the right information is included and that it’s accurate as of the time indicated on the form.
Form 5500 Outsourced Preparation Free Checklist
Most small businesses have this form completed by their 401(k) plan administrator, although some plan sponsors choose to prepare and submit the filing themselves. However, you as the employer are still responsible for ensuring that filings are accurate and on time, so be sure to review administrator-prepared filings for accuracy before they’re submitted.
How Form 5500 Works
Form 5500 was developed by the IRS in conjunction with the United States Department of Labor (DOL). The form is by the IRS and DOL to gather detailed information on employer-sponsored retirement plans subject to the Employee Retirement Income Security Act (ERISA). Most plans must file Form 5500 before July 31st each year, although 10-week extensions may be granted.
Information reported on Form 5500 includes:
- Company name
- Employer identification number
- Plan sponsor contact information
- Number of active plan participants at the beginning of the plan year
- Number of active participants at the end of the plan year
- Number of former employees with assets in the plan at the end of the plan year
- Type of plan
The IRS and DOL gather this information annually as part of their efforts to oversee employer-sponsored retirement plans that are subject to ERISA. Under ERISA, many types of retirement plans are thoroughly regulated to ensure that employers aren’t violating any laws and are looking out for employees’ best interests.
Who Needs to Complete IRS Form 5500
Form 5500 must be filed for any retirement plan subject to ERISA including 401(k)s, profit-sharing plans and employee pension plans. 403(b) plans, however, are not required to file a 5500. In most cases, either business owners prepare and submit IRS Form 5500 or hire retirement plan administrators to do so on their behalf.
Plans that are exempt or may be exempt from filing a 5500 include:
- Single-participant plans, or solo 401(k)s
- 403(b) plans
- Simplified employee pension individual retirement accounts (SEP IRAs)
Whether or not a retirement plan sponsor hires a 401(k) company to prepare and file their 5500, it remains their responsibility to make sure the 5500 is accurate and filed before the deadline. Failure to file Form 5500 instructions can result in thousands of dollars in penalties or plan disqualification.
Form 5500 Penalties for Late Filing
It’s extremely important for retirement plan sponsors to follow Form 5500 instructions including submitting proper filings before the deadline. If a plan sponsor uses an independent plan administrator to assist with plan compliance, including file a 5500, the plan sponsor can still face penalties if their 5500 is inaccurate or filed late.
Penalties for failing to file Form 5500 on time include:
- IRS late-filing penalty: $25 per day up to $15,000
- DOL late-filing penalty: Up to $1,100 per day with no maximum
While the IRS and DOL charge fees for late 5500 filings, they do not void or disqualify plans a result of failure to submit these filings. Instead, plans are more often disqualified after employers fail to perform 401(k) nondiscrimination testing including actual deferral percentage (ADP) and actual contribution percentage (ACP) testing.
Form 5500 Deadline
Most retirement plans must file Form 5500 and necessary attachments annually within eight months of the end of their plan year. For retirement plans that are calendar year plans, their deadline is July 31. According to Form 5500 instructions, plan sponsors must have their Form 5500 and all attachments submitted before their deadline.
Plan sponsors that miss the Form 5500 deadline can file Form 5558 before their normal 5500 filing deadline to request one extension per year. Using Form 5558, plan sponsors can get an extension to file Form 5500 up to two and a half months after their normal deadline.
Plan sponsors that file for personal income-tax filing extensions are also automatically granted extensions on IRS Form 5500 until their extended tax-filing deadline, provided that their plan year and tax year are the same. These sponsors do not need to file Form 5558 — the extension is granted automatically. However, sponsors who request extensions until their tax-filing deadline may not get additional extensions.
Additional Form 5500 Schedules
Sponsors of retirement plan subject to ERISA must file a Form 5500. According to Form 5500 instructions, plan sponsors may also need to complete and submit one or more additional schedules that provide detailed financial information about the plan’s operations and finances. The schedule(s) a plan sponsor must file vary based on the type of retirement plan and benefits provided to employees.
Form 5500 instructions may require employers to file additional schedules including:
- Schedule A: Required for plans that offer employee benefits provided by an insurance company
- Schedule H: Filed by welfare benefit or pension benefit plans including 401(k)s and profit-sharing plans that have 100-plus participants
- Schedule I: Used by welfare benefit plans or pension benefit plans including 401(k) plans and profit-sharing plans that have 99 participants or fewer
- Schedule R: Filed by certain pensions that are defined benefit plans
How to Complete Form 5500 in 5 Steps
In order to avoid penalties or potential plan disqualification, it’s important for plan sponsors to follow Form 5500 instructions carefully when preparing and submitting their Form 5500. In addition to Form 5500, which has several parts — most plan sponsors must also submit one or more additional schedules that vary by plan type.
Plan sponsors who engage a 401(k) plan administrator may be able to skip some of these steps. However, it’s important to understand the process to ensure that the right schedules, Form 5500 instructions are followed, and all filings are submitted on time. If you don’t have a copy of Form 5500, you can start by downloading it here.
The five steps to complete Form 5500 are:
1. Enter Annual Report Information
The first step in completing IRS Form 5500 is to enter the annual report identification information necessary for Part 1. This includes the plan fiscal year covered by the filing, plan type, whether the report is original or amended, whether collective bargaining covers the plan, and if the form is being filed with an extension.
2. Complete Plan Information
As part of Form 5500, information must be submitted on the plan sponsor and any third-party administrator used for the plan including contact information and employer identification numbers. Part 2 of a 5500 also includes information on the number of participants in a plan plus those separated from employment or deceased.
In addition to information on the number of participants in a plan, Form 5500 instructions require plan sponsors to include information on the characteristics of the plan including the type of benefits offered through the plan and additional schedules to be filed to detail plan operations and financials.
“If an ERISA bond is required of your plan, make sure you have one, and you report it on IRS Form 5500. This requirement on Form 5500 gets missed too often and is a red flag for the IRS. Don’t invite an IRS audit or further review. There are a few payroll providers out there who also offer 401(k) Services, where this oversight tends to occur more often.”
— Kirsten Curry, Founder, Leading Retirement Solutions
Depending on the type of retirement plan that you offer, you may also need to Part 3 on page 3 of Form 5500. However, according to IRS Form 5500 instructions, this section is only for use by welfare benefit plans including life, health and long-term disability plans.
3. Identify & Complete Relevant Additional Schedules
As part of completing IRS Form 5500, you need to select those additional schedules that you need to complete and attach based on the operations of your individual retirement plans and benefits provided to employees. You can refer to the DOL’s Form 5500 instructions manual to decide what additional schedules are necessary.
Once you identify the additional schedules that you need to complete with your 5500, you can download them directly from the DOL. Each schedule is typically several pages, can take between 30 minutes and several hours to complete and requires detailed financial information including participant contributions for the preceding year.
The additional schedules that you’ll need to complete for your 5500 vary based on the type of retirement plan that you offer and the specific retirement benefits that you offer employees. This is one part of Form 5500 preparation that can be made a lot easier by working with a 401(k) company who can complete these schedules for you.
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4. Sign Form 5500
Once you’ve completed your form and attached the necessary schedules, don’t forget to sign your Form 5500 back on Page 1 of the filing. If you use a 401(k) company as a third-party administrator for your plan, you’ll also need a signature from the administrator before submitting your form.
5. Submit Before Form 5500 Deadline
Submitting Form 5500 and necessary attachments on time is perhaps the most important part of Form 5500 instructions. Plan sponsors must make sure that their 5500 is submitted within 8 months of the end of their plan year. Most businesses use a calendar year for their plan year, making July 31 their filing deadline.
Once a plan sponsor or plan administrator has prepared Form 5500, and it has been signed, the 5500 can be submitted in hard copy or online through the DOL’s Employee Benefits Security Administration (EBSA). Using the EBSA’s EFAST2 system, plan sponsors can submit their 5500 quickly and electronically.
Failure to file Form 5500 before the filing deadline can result in significant penalties and even plan disqualification. For greater detail on penalties for failing to file on time, please refer to the Form 5500 penalties section above.
Plan sponsors filing their own 5500 need to follow all of the steps above. However, if you’ve hired a 401(k) administrator to help with plan compliance issues, he or she may be preparing and filing Form 5500 on your behalf. In this case, you won’t complete every step yourself, but understanding the process will help you ensure your 5500 is prepared accurately and submitted on time.
If you’ve hired a third-party administrator to assist with your 5500, be sure to make note of your filing deadline so that you can follow up with your administrator after the end of your plan year. You’ll need to make sure the administrator has all the information he or she needs to prepare your 5500, review the form for accuracy and ensure that it’s submitted before your filing deadline.
IRS Form 5500 Alternatives
In certain cases, small businesses that only have between one and up to 100 plan participants can file versions of Form 5500 that are faster and easier to complete. Retirement plans with just one participant can use Form 5500-EZ, while plans with fewer than 100 participants may be able to use Form 5500-SF.
Two IRS Form 5500 alternatives that some businesses are eligible to file instead are:
Form 5500-EZ is a shorter version of IRS Form 5500 is used by single-participant plans like Solo 401(k)s. Retirement plans with only one participant are subject to different filing requirements because they don’t have eligible employees other than the business owner. If you need a copy of Form 5500-EZ, you can download it here.
With 5500-EZ, single-participant plans are able to submit abbreviated filings that provide information in a much shorter format. They also aren’t required to file lots of additional schedules based on plan operations – there’s just one additional schedule that may be required, and that’s only for defined benefit plans.
Form 5500-EZ is ideal if you have a single-participant plan like a Solo 401(k). If you ever hire employees or add additional 401(k) participants, you’ll no longer be able to use 5500-EZ but, in the meantime, you can use Form 5500-EZ instructions to complete the form and file it annually within seven months of the end of the plan year.
Some retirement plans that have more than one participant may be eligible to file Form 5500-SF, or “short form.” To be eligible for 5500-SF a plan must meet certain criteria which include having fewer than 100 participants at the beginning of the plan year, holding no employer stock and investing only in certain investments with known values.
“Small employers who only have welfare plans with fewer than 100 employees enrolled in their plans may take advantage of an exemption from filing a Form 5500 if all benefits are paid from general assets. If, however, they establish a separate account for employee contributions and payment of premiums or establish an actual trust for these benefits, the employer no longer meets the exemption and must file a Form 5500.”
— Anne Liebeskind, Client Success Manager, PrimePay
You can refer to Form 5500-SF instructions to see whether you qualify for 5500-SF or have your 401(k) provider check eligibility requirements. Form 5500-SF is a much better form to file if you have fewer than 100 plan participants and want to do your own 5500 filing.
Form 5500 Frequently Asked Questions (FAQs)
If you still have questions about Form 5500 preparation or filing, here are some of the most frequently asked questions about Form 5500. If you still don’t see the answer to your question, feel free to post it in the comments below. Alternatively, you can visit the FitSmallBusiness Forum and post it there.
Who Fills Out Form 5500 for My 401(k)?
Many 401(k) plans hire a 401(k) company to help with administration and record keeping to keep their plan in compliance. Most third-party administrators complete Form 5500 after plan sponsor review as part of their 401(k) services. However, some plan sponsors complete and submit Form 5500 own their own to reduce costs.
What’s the Penalty if I Don’t Submit Form 5500?
Failure to submit Form 5500 to the IRS and DOL on time will result in penalties that start at $25 per day for the IRS and up to $1,100 for the DOL. If you never submit a 5500, your retirement plan can be disqualified triggering taxes on contributions and additional penalties.
Can You Look-up a Form 5500?
All Form 5500 and 5500-SF submissions are on file at the DOL and can be searched online by characteristics including plan sponsor, administrator, filing ID or EIN. Looking up a 5500 is an excellent way for plan sponsors to refer to previous filings or research other businesses’ retirement plans.
Where Can I Download Form 5500?
The DOL has current and previous copies of Form 5500 online as well as additional schedules that plan sponsors may need to file in conjunction with Form 5500. Plan sponsors can download the most recent version of Form 5500 from the DOL’s website as well as a Form 5500 Checklist.
What is the 80-120 Rule for Form 5500?
The IRS and DOL have different filing requirements for small plans vs. large plans that have at least 100 participants. The 80-120 rule allows sponsors of retirement plans that cross the 100-participant threshold to use the same filing category as the previous year if they had 80-120 plan participants at the beginning of plan year.
The Bottom Line
IRS Form 5500 is a filing that must be submitted annually to the DOL to report certain information on retirement plans including 401(k)s. Plan sponsors that are required to file must follow Form 5500 instructions carefully and be sure to file before their deadline. Use the checklists above to get started with your filing.
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