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March 4, 2014

Should You File An Annual Form 5500?

Are you filing Form 5500 for your health and welfare benefit plans? 

If you have over 100 eligible participants, you should be filing an annual Form 5500 with the Department of Labor (DOL). ERISA requires welfare benefit plans to file this form with the DOL. It must be filed by the last day of the seventh month following the plan’s year end; however, a plan sponsor can request an extension of up to two and a half months. Small plans (defined as having less than 100 eligible participants on the first day of the plan year) do not have to file a Form 5500 if they are fully insured, unfunded, or a combination of fully insured and unfunded. 

Often times, plan sponsors, who have not previously filed a Form 5500, fail to start filing the form once the eligible participants reach 100 or more. The ultimate responsibility lies with the plan sponsor to determine when they reach the threshold and are required to begin filing the Form 5500.

The penalties for failure to file the Form 5500 can be up to $1,100 per day on the plan sponsor. Fortunately, the DOL provides plan administrators reduced penalties for voluntarily complying with the annual filing requirements through the DOL’s Delinquent Filer Voluntary Compliance Program. Late filings submitted through this program are subject to a flat penalty amount [which is substantially less than the penalties that could be imposed by the DOL (and the IRS) for the failure to file outside of this program]. This penalty is generally capped at $2,000 per plan per year, with a maximum $4,000 penalty per plan (so, regardless of how many years are filed for the same plan, the penalty will be capped at $4,000).

If you have questions regarding filing an annual Form 5500, please contact Linda Lauer at llauer@cbiz.com or (901) 685.5575.  

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