What is the Purpose of Form 5500?

By hrlineup | 17.12.2019

Employers need to be aware of the Form 5500 Annual Return or Report of Employee Benefit Plan. This is a special form that is needed for filing the annual information for an employee benefit plan return with the Department of Labor. This form is linked to the Employee Retirement Income Security Act (ERISA) which is a law that has been put in place to clearly define the minimum standards for pension and health plans that are in the private sector. This is so that the employees who are under these plans are protected, and this also includes their beneficiaries.

It is worth noting that the Form 5500 is excellent for small business owners who need to document to the government what benefits they offer for health care and retirement. Within it is financial information that helps the government make sure that the plans are managed based on the rules. To better understand Form 5500, there are various plans that need to be considered including: –

  1. Welfare benefit plans including medical, life insurance and dental.
  2. Retirement plans that also include stock bonus plans, money purchase plans and profit sharing plans.
  3. IRAs that have been put in place by employers.
  4. Insurance and annuity plans.

For better guidance, benefit plan tax fillings ensure that the filling process is smoother. These are normally defined so that the benefits are based on a fixed formula. It is for these plans that you will find the Form 5500 has been developed, as it is meant to satisfy the requirements for annual reporting under the Internal Revenue Code as well as the ERISA.

When you should fill out Form 5500

This is a form that is typically meant to be filled up every year. This is particularly necessary with the plan is subject to ERISA. Those ERISA plans that have in excess of 100 participants at the start of the plan year need to file their annual Form 5500. The form 5500 due date is the last day of the seventh month after the plan year ends.

It is important to note this requirement as the penalty is quite severe. If this Form 5500 is not filled, then the employer may be tasked with paying a penalty of up to $1,100 per day, for each plan.

Filling out Form 5500

If you are looking for intricate details on how you should fill out the Form 5500, then you should visit the DOL.gov website. Here, there is an 82-page document that will provide form 5500 instructions in full detail. It is possible to get this form filled out for you by a service provider who is competent in this area. However, when you get this type of assistance, it is important for you to go through the form in detail to establish whether there are any errors, and that it has been properly submitted.

Within the form you will find that there is the main form that is two pages in length as well as several additional schedules where the employer must establish which are the most relevant. The basic information that is needed is the name of the plan and the date that it has become effective. This is then followed by information about the employer and the plan administrator. It also includes the number of employees that are covered under the plan to the end of the year, as well as the way that the benefits are being funded.

Where to get some more information

When you are looking for some more information on the annual report form 5500, there are several resources that you can refer to. These include the IRS.gov website that contains the form as well as details on when it should be filled out.

If you find that this form is still confusing, then you can use the services of Accounting and CPA firms who understand the form and can ensure that the right schedules are filled as required. There are also Benefit Plan Administrators that can offer some assistance. The form itself may seem a little daunting but getting help with it can make sure that you are within stipulated regulations and keep to the time line.

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