The Employer’s Guide to IRS Form 5500

Do you offer your employees benefits? If so, it’s important you understand and comply with legal requirements.

If you offer an ERISA-covered employee benefit plan to your employees, you may need to deal with IRS Form 5500. In short: ERISA is a federal law that protects the employees who are enrolled in the plan to ensure discrimination does not take place and that employers share key information about the plan with employees. 

Form 5500 is only three pages long—but the instructions currently run a whopping 82 pages, and there’s a laundry list of required supplemental filings. There are also two alternate versions of the form, Form 5500-SF and Form 5500-EZ. 

There is, needless to say, some complexity here. 

But don’t worry; we’ll explain the following:

• Who needs to file each of these forms
• Common pitfalls to watch out for, and 
• Where to get help if you need it

What is the Form 5500 series?

The Form 5500 series was jointly developed by the IRS, the US Department of Labor (DOL), and the Pension Benefit Guaranty Corp. (PBGC) so that employers who sponsor employee benefit plans can satisfy the annual reporting required by ERISA and federal tax law.

Plan administrators are required to submit one of the three versions of the Form 5500 (more on those in a minute), along with any required schedules, statements, and attachments.

What plans require Form 5500 reporting?

Here are some of the plans that require Form 5500 series reporting:

Pension benefit plans

• Profit-sharing plans
• Stock bonus plans
• Money purchase plans (these are like profit-sharing plans, but with a fixed employer contribution each year)
• 401(k)s
• IRAs
• Certain annuity arrangements and custodial accounts

Welfare benefit plans

• Medical plans
• Dental plans
• Life insurance plans
• Some apprenticeship and training plans
• Scholarship plans
• Severance pay plans
• Disability plans
• Multiple-employer welfare arrangements (MEWAs)

What plans do not require Form 5500 reporting?

• SIMPLE IRAs
• SEPs
• Unfunded pension plans, or unfunded or insured welfare benefit plans, for a select group of management or highly compensated employees that meet certain requirements 
• Employee benefit plans maintained only to comply with workers’ compensation, unemployment compensation, or disability insurance laws
• A pension benefit plan or welfare benefit plan that covers only one person (or one person and his or her spouse) who wholly owns a trade or business, whether incorporated or unincorporated. Some one-person plans are still required to file 5500-SF or 5500-EZ; see below.
• A pension benefit plan or welfare benefit plan for a partnership that covers only the partners, or the partners plus their spouses. Some partnership plans are still required to file 5500-SF or 5500-EZ; see below.
• A welfare benefit plan covering fewer than 100 participants as of the beginning of the plan year that is not a MEWA subject to the Form M-1 requirements and is:
  • Unfunded (benefits are paid directly from the employer or employee organization that sponsors the plan);
  • Fully insured (benefits are provided exclusively through insurance contracts or policies issued by an insurance company or similar organization, such as Blue Cross/Blue Shield); or
  • A combination of insured and unfunded (for example, medical benefits are unfunded and life insurance benefits are fully insured) 

A quick rundown of the 5500 series

• Form 5500, Annual Return/Report of Employee Benefit Plan
  • Who files: Administrator of an ERISA-covered employee benefit plan with 100 or more participants as of the beginning of the plan year  
  • How to file: Must be filed electronically via EFAST2, using either approved third-party software or IFILE.
  • When to file: The last day of the seventh month after the plan year ends (July 31 for a calendar-year plan). File Form 5558 on or before the Form 5500 deadline to receive a 2½-month extension.

• Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan
  • Who files: Administrator of an ERISA-covered employee benefit plan with fewer than 100 participants as of the beginning of the plan year. In order to qualify for 5500-SF filing, the plan must also:
    • Be exempt from the requirement that its books and records be audited by an independent qualified public accountant (IQPA);
    • Have 100% of its assets invested in certain secure investments with a readily determinable fair value;
    • Hold no employer securities;
    • Not be a multiemployer plan; and
    • Not be required to file Form M-1
  • How to file: Must be filed electronically via EFAST2, using either approved third-party software or IFILE.
  • When to file: The last day of the seventh month after the plan year ends (July 31 for a calendar-year plan). File Form 5558 on or before the Form 5500 deadline to receive a 2½-month extension.

• Form 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan 
  • Who files: Foreign plans and “one-participant” plans—meaning a retirement plan that covers only the business owner, business owner and spouse, or one or more business partners and their spouses. One-participant plans with less than $250,000 in plan assets at the end of the plan year do not need to file, unless it’s the final year of the plan.  
  • How to file: You must mail a paper copy to the IRS office in Ogden, Utah. Alternatively, you can file the Form 5500-SF—instead of the Form 5500-EZ—electronically via EFAST2 (again, using either approved third-party software or IFILE). If you do this, you don’t need to fill out the entire Form 5500-SF; see the Form 5500-EZ instructions for more details.
  • When to file: The last day of the seventh month after the plan year ends (July 31 for a calendar-year plan). File Form 5558 on or before the Form 5500 deadline to receive a 2½-month extension.

Small plans vs. large plans

The number of participants you enter on line 5 of Form 5500 or line 5a of Form 5500-SF dictate whether your plan is considered a “small plan” or a “large plan.”

As mentioned above, plans with 100 or more participants at the beginning of a plan year are generally required to file Form 5500 and should do so following the requirements for a large plan; more on these below. 

Plans with fewer than 100 participants at the beginning of the plan year that do not meet all of the additional eligibility requirements for Form 5500-SF must also file Form 5500 and should do so as a small plan. Small plans, unsurprisingly, have fewer reporting requirements. 

To simplify recordkeeping for plans that hover around the 100-participant mark, if a plan has between 80 and 120 participants and filed the previous year, it can elect to continue in the same category (large plan or small plan) as it filed in the previous year.

Schedules and attachments

These are some of the standard additional filings that need to accompany Form 5500 series filings. See the checklists below for more information about which to include when.

• Schedule A: Insurance Information
• Schedule C: Service Provider Information
• Schedule D: DFE/Participating Plan Information
• Schedule G: Financial Transaction Schedules
• Schedule H: Financial Information
• Schedule I: Financial Information – Small Plan
• Schedule MB: Multi-employer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information
• Schedule R: Retirement Plan Information
• Schedule SB: Single-Employer Defined Benefit Plan Actuarial Information
• IQPA: Report of an independent qualified public accountant

Common Form 5500 series filing problems

• EFAST2 errors. Check out the EFAST2 FAQs here.
• Form 5500 or Form 5500-SF is not properly signed and dated. These forms must be filed electronically, but the plan administrator is also required to keep an original copy of the filing along with all required signatures. (This is a good idea for Form 5500-EZ filings, too, as well as any other filings you send to the IRS.)
• Form 5500 has an incorrect or inconsistent EIN and/or plan number (PN).
• Required schedules or attachments are missing.
• Form is not completely filled out.
• The time period entered is longer than 12 months.
• Form 5500 or 5500-SF is filed as a “final return/report” but the plan has assets, liabilities, or participants remaining at the end of the plan year.
• Improper business code is used in line 2d of Form 5500.
• Incorrect plan characteristic codes are used on Form 5500.
• Funding and benefit arrangements are improperly entered on line 9 of Form 5500 or Form 5500-SF.
• The wrong financial information schedule is filed with Form 5500 (Schedule H is for large plan filers and Schedule I is for small plan filers).
• Multipart questions are not fully answered.
• The form is filed late, which can result in hefty penalties. File Form 5558 on or before the Form 5500 deadline to receive a 2½-month extension. 

Small pension plan checklist

Form 5500

• Form 5500
• Schedule A, if applicable
• Schedule SB or MB, if applicable
• Schedule D, Part I, if applicable
• Schedule I
• Schedule R, if applicable
• IQPA report, if the plan does not meet the conditions for the small plan audit waiver
• Schedule of Delinquent Participant Contributions, if applicable

Form 5500-SF (if eligible, file instead of Form 5500)

• Form 5500-SF
• Schedule SB or MB, if applicable

Small welfare plan checklist

Form 5500

• Form 5500
• Schedule A, if applicable
• Schedule D, Part I, if applicable
• Schedule I
• Schedule of Delinquent Participant Contributions, if applicable

Form 5500-SF (if eligible)

• Form 5500-SF only (no schedules needed)

Large pension plan checklist

• Form 5500
• Schedule A, if applicable
• Schedule C, if applicable
• Schedule D, Part I, if applicable
• Schedule G, if applicable
• Schedule H
• Schedule SB or MB, if applicable
• Schedule R, if applicable
• Schedule of Delinquent Participant Contributions, if applicable
• Schedules of Assets Held for Investment Purposes and Reportable Transactions
• Report of the IQPA identified on Schedule H, Line 3c (unless Schedule H, Line 3d(2) is checked)

Large welfare plan checklist

• Form 5500
• Schedule A, if applicable
• Schedule C, if applicable
• Schedule D, Part I, if applicable
• Schedule G, if applicable
• Schedule H, unless exempt
• Schedule of Delinquent Participant Contributions, if applicable
• Schedules of Assets Held for Investment Purposes and Reportable Transactions
• Report of the IQPA identified on Schedule H, Line 3c (unless Schedule H, Line 3d(2) is checked)

Recordkeeping

The plan administrator is required to keep a copy of the Form 5500 and Form 5500-SF, including schedules and attachments, with all required manual signatures, as part of the plan’s records. If you filed Form 5500-EZ, it’s also a good idea to keep a copy on hand.  

Plan administrators are also required to provide participants with a summary annual report (SAR) by the later of nine months after the end of the plan year or two months after Form 5500 is due, if an extension has been granted by the IRS.

The SAR is a narrative summary of the information included in the Form 5500 and should include:

• Administrative expenses incurred by the plan;
• Amount of benefits paid to participants and beneficiaries;
• Total value of plan assets;
• A pension plan’s compliance with the minimum funding standards; and
• Information about participants’ right to receive a copy of the full annual report, or any part of it.

In May 2019, the DOL released updated templates to help administrators prepare the SARs for welfare plans and pension plans.  

Where to get help or more information

• IRS Form 5500 Corner contains more information about the forms and filing requirements.
• DOL Troubleshooter’s Guide to Filing the ERISA Annual Report contains detailed filing information, including line-by-line guides for completing Forms 5500 and 5500-SF, as well as many of the required schedules. Note that this guide is still accurate but several years old, so always refer to the current-year forms and instructions for the most up-to-date information.
• Guideline (Gusto’s 401(k) provider) can help with filing.

The Form 5500 series is a burdensome requirement for plan administrators, so allow yourself plenty of time to figure out exactly what covered plan(s) you offer, which 5500 series form you need to file, and which schedules and attachments must accompany it. As always, Gusto is here to help you out if you have questions.