Who Must File a Form 5500?
Plans with more than 100 participants on the first day of the plan year must file a Form 5500 and associated schedules with the Department of Labor (DOL) each year for their health and welfare plans. Such health and welfare benefit plans may include: health, dental, vision, life insurance, short-term and long-term disability and health FSA plans. An employer will have to evaluate each employee welfare benefit to determine whether it is covered under ERISA. Form 5500 filings are not required for health and welfare plans sponsored by a governmental employer or by a church.
Deadlines and Costly Penalties
The due date for filing a Form 5500 is the last day of the seventh month after the plan year ends. The most common filing due date is July 31st for employers with a calendar-year plan. The DOL’s Delinquent Filer Voluntary Compliance Program (DFVCP) encourages voluntary compliance with the annual reporting requirements and gives plan administrators the chance to avoid potentially higher penalties by paying a reduced penalty amount and bringing the plan into compliance with past filings. Employers are encouraged to correct Form 5500 filing errors as soon as possible, as DFVCP penalties are less expensive than waiting for the DOL to send a notice regarding failure to file.
Late filers submitting under the DFVCP before receiving written notice of failure to file by the Department of Labor incur penalties of $10 per day, up to $2,000 for each annual report, not to exceed $4,000 per plan, for the period they failed to file.
Late filers who have received written notice of failure to file by the Department of Labor are ineligible to participate in the DFVCP, and may be assessed penalties of $50 per day with no limit for the period they failed to file. Non-filers for annual reports may be assessed a penalty of $300 per day, up to $30,000 per year, until their report is filed.
BASIC Can Help
Knowing what is required of your organization and how to file a Form 5500 can be complicated. That’s why the IRS recommends ways to avoid filing errors, including hiring an outside service provider (e.g. BASIC) to take responsibility for filing accurately and on time. BASIC navigates these complex requirements for employers to meet deadlines and save them as much money as possible. BASIC provides complete ERISA compliance solutions, as well as individual Form 5500 services, to ensure guaranteed compliance and avoid costly fines. Depending on the organization’s plan document structure, employers can choose to have BASIC file each benefit plan with more than 100 participants separately, or take advantage of BASIC’s Wrap 5500 service. This service allows BASIC to pull all employee benefits into a single plan and reduce the number of required Form 5500 filings.
It is also common for employers to realize that a Form 5500 deadline has already passed. BASIC offers a Delinquent 5500 Filer service at an additional cost, for those employers who failed to file their Form 5500(s) for previous plan years.
Don’t fall victim to costly penalties from late Form 5500 filings. Request a proposal for BASIC’s ERISA Essentials or a stand-alone 5500 Filing today!