If you are an employer in Nebraska who offers employee benefit plans to your workforce, such as retirement plans, health plans, or welfare plans, you may be required to file an annual report with the Internal Revenue Service (IRS) and the Department of Labor (DOL) using the IRS Form 5500. This report provides information about the plan’s financial condition, operations, compliance, and participants. Filing the IRS Form 5500 is not only a legal obligation, but also a way to demonstrate your commitment to providing quality and transparent benefits to your employees.
In this article, we will explain what the IRS Form 5500 is, what types of plans need to file it, what versions of the form are available, how to prepare and file the form, and how Vesta Employee Benefit Solutions can help you with the process.
What is the IRS Form 5500?
The IRS Form 5500 is part of the Form 5500 series, which is a set of forms developed by the IRS, the DOL, and the Pension Benefit Guaranty Corporation (PBGC) to satisfy the annual reporting requirements for employee benefit plans under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). The Form 5500 series is intended to ensure that employee benefit plans are operated and managed in accordance with certain standards, and that plan participants and beneficiaries, as well as regulators, have access to sufficient information to protect their rights and benefits.
The IRS Form 5500 is the general form for employee benefit plans that are subject to ERISA and the IRC. It covers various types of plans, such as pension plans, individual retirement accounts (IRAs), medical, dental, and life insurance plans, severance pay plans, profit-sharing plans, stock bonus plans, and disability benefits plans. The IRS Form 5500 requires information about the plan’s name, sponsor, administrator, fiduciary, trustee, funding, assets, liabilities, income, expenses, investments, transactions, participants, benefits, claims, and compliance.
Who needs to file the IRS Form 5500?
Not all employee benefit plans need to file the IRS Form 5500. Generally, the following types of plans are exempt from filing the form:
- Governmental plans, such as plans sponsored by federal, state, or local governments or their agencies or subdivisions
- Church plans, such as plans sponsored by churches or associations of churches, unless they elect to be covered by ERISA
- Plans that cover only one individual or one individual and their spouse, such as plans for sole proprietors, partners, or owners of S corporations, unless they have employees who are also covered by the plan
- Plans that cover only a select group of management or highly compensated employees, such as top-hat plans or excess benefit plans
- Plans that are unfunded or insured and cover only a small number of employees, such as plans that have fewer than 100 participants at the beginning of the plan year and are either paid directly from the employer’s general assets or fully insured by an insurance company
If your plan is not exempt from filing the IRS Form 5500, you must file the form by the last day of the seventh month after the end of your plan year, unless you request an extension. For example, if your plan year ends on December 31, 2023, you must file the form by July 31, 2024, unless you obtain an extension. You can request an extension of up to 2.5 months by filing the IRS Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, before the due date of the form.
What version of the IRS Form 5500 should you file?
Depending on the size and type of your plan, you may need to file a different version of the IRS Form 5500. The Form 5500 series consists of the following forms:
- IRS Form 5500: This is the general form for employee benefit plans that have 100 or more participants at the beginning of the plan year, or that are funded through a trust, regardless of the number of participants. This form requires the most detailed information and may also require additional schedules and attachments, depending on the plan’s characteristics.
- IRS Form 5500-SF: This is a short form for small employee benefit plans that have fewer than 100 participants at the beginning of the plan year, and that meet certain criteria, such as being exempt from an audit, having at least 95% of the plan’s assets invested in certain secure and easy-to-value investments, and holding no employer securities. This form requires less information and fewer schedules than the IRS Form 5500.
- IRS Form 5500-EZ: This is a simplified form for one-participant plans or foreign plans that are not subject to ERISA, but are required to file an annual report under the IRC. A one-participant plan is a plan that covers only one individual or one individual and their spouse, who are owners or partners of the business sponsoring the plan, and who have no employees covered by the plan. A foreign plan is a plan that is maintained outside the United States primarily for nonresident aliens. This form requires the least information and no schedules.
You must file the appropriate version of the IRS Form 5500 for your plan electronically using the DOL’s EFAST2 filing system, unless you are filing the IRS Form 5500-EZ, which can be filed either electronically or on paper with the IRS. You can access the EFAST2 filing system online or use an approved software vendor or service provider to file the form on your behalf.
How to prepare and file the IRS Form 5500?
Preparing and filing the IRS Form 5500 can be a complex and time-consuming task, especially if you have a large or diverse plan that requires multiple schedules and attachments. You will need to gather and verify various data and documents related to your plan, such as the plan document, the summary plan description, the trust agreement, the insurance contracts, the financial statements, the participant records, the compliance tests, and the audit report, if applicable. You will also need to complete and review the form and the schedules carefully, ensuring that they are accurate, consistent, and compliant with the applicable rules and regulations.
To help you with the process, you can follow these steps:
- Determine the type and size of your plan and the version of the IRS Form 5500 that you need to file
- Identify the information and documents that you need to complete the form and the schedules
- Collect and organize the data and documents from your plan’s records, service providers, and advisors
- Fill out the form and the schedules using the EFAST2 filing system or an approved software vendor or service provider
- Check the form and the schedules for errors, omissions, and inconsistencies
- Sign and date the form and the schedules electronically using the EFAST2 filing system or an approved software vendor or service provider
- Submit the form and the schedules electronically using the EFAST2 filing system or an approved software vendor or service provider, or mail the IRS Form 5500-EZ on paper to the IRS, if applicable
- Keep a copy of the form and the schedules and the confirmation receipt for your records
- Distribute the summary annual report (SAR) to your plan participants and beneficiaries within nine months after the end of the plan year, or two months after the due date of the form, if you obtained an extension
How can Vesta help you with the IRS Form 5500?
Filing the IRS Form 5500 can be a daunting and stressful task for employers, especially if they lack the expertise, resources, or tools to do it properly. You may face difficulties in understanding the filing requirements, gathering the necessary information and documents, completing and reviewing the form and the schedules, and submitting and distributing the form and the SAR. You may also face risks of noncompliance and penalties if you fail to file the form on time, accurately, and completely.
That is why you need Vesta Employee Benefit Solutions, a leading provider of employee benefits solutions in Nebraska, with over 10 years of experience and expertise. Vesta can help you with the following services:
- Design, implement, and manage an employee benefit plan that meets your specific needs and goals, and that complies with ERISA and the IRC
- Determine the type and size of your plan and the version of the IRS Form 5500 that you need to file
- Collect and organize the information and documents that you need to complete the form and the schedules
- Fill out, review, and sign the form and the schedules using the EFAST2 filing system or an approved software vendor or service provider
- Submit the form and the schedules electronically using the EFAST2 filing system or an approved software vendor or service provider, or mail the IRS Form 5500-EZ on paper to the IRS, if applicable
- Provide you with guidance and support on how to avoid and correct common errors, how to request and file an extension, and how to respond to inquiries or audits from the IRS or the DOL
- Prepare and distribute the SAR to your plan participants and beneficiaries
- Assist you with other aspects of your employee benefit plan, such as benefits enrollment, employee engagement, compliance support, and wellness programs
To learn more about Vesta and how they can help you with your IRS Form 5500 and other employee benefits needs, give them a call today.