If you sponsor or administer a private-sector employee benefit plan covered by ERISA, you generally need to file Form 5500 each year. That covers almost every tax-qualified retirement plan and any welfare plan with 100 or more participants at the start of the plan year. A handful of arrangements sit entirely outside the requirement, including owner-only plans below $250,000 in assets, government and church plans, SEP and SIMPLE IRAs, and top-hat plans for a small group of executives.1U.S. Department of Labor. Form 5500 Series
The form is a joint annual report used by the Department of Labor, the IRS, and the Pension Benefit Guaranty Corporation to check that plans are being run in the financial interest of their participants. Whether you file, and which version you use, turns on the type of plan, its participant count, and how it is funded.
Retirement Plans That Must File
Nearly every tax-qualified retirement plan owes an annual Form 5500. That includes 401(k) plans, defined benefit pensions, profit-sharing plans, money purchase plans, and ESOPs.2Department of Labor. Instructions for Form 5500 Annual Return/Report of Employee Benefit Plan
A frozen plan still files. So does a plan that is winding down, until every dollar has been distributed to participants or rolled over. Skipping that final-year return is one of the most common mistakes sponsors make during a termination.
Welfare Plans That Must File
Welfare plans cover health, dental, vision, life insurance, disability, and severance benefits. A welfare plan must file Form 5500 if it has 100 or more participants at the beginning of the plan year. Large welfare plans attach schedules reporting insurance contract details and service provider compensation.
Small welfare plans, those with fewer than 100 participants, are generally exempt as long as they are either unfunded (benefits paid from the employer’s general assets) or fully insured (benefits funded entirely through insurance contracts). A small welfare plan that holds assets in a trust loses the exemption and has to file.3U.S. Department of Labor. Changes for the 2023 Form 5500 and Form 5500-SF Annual Return/Reports
Plans That Are Exempt
Several benefit arrangements sit entirely outside ERISA’s reporting rules and owe no Form 5500.
Owner-Only Plans Below $250,000
A retirement plan covering only the business owner, or the owner and their spouse, with no rank-and-file employees, is exempt from filing as long as total assets across all of the employer’s one-participant plans stay at or below $250,000 at the end of every plan year.4Internal Revenue Service. Financial Advisors Are Assets in Your Clients One Participant Plans More Than 250000 The same exemption applies to partnerships where only partners and their spouses participate. Once assets cross $250,000, the plan files Form 5500-EZ.
Government and Church Plans
Plans run by federal, state, or local governments are not subject to ERISA’s Title I and have no Form 5500 obligation. Church plans that have not elected ERISA coverage are similarly exempt.5Internal Revenue Service. Chapter 4 Church Plans, Government and Single-Employer Plans
SEP and SIMPLE IRA Plans
Employers sponsoring Simplified Employee Pension (SEP) or SIMPLE IRA plans generally have no Form 5500 requirement.6Internal Revenue Service. Simplified Employee Pension Plan (SEP) These arrangements hold assets in individual IRAs rather than a plan trust, and the IRS treats them differently from qualified plans like 401(k)s.
Top-Hat Plans
Unfunded deferred compensation plans maintained for a select group of management or highly compensated employees are exempt from the annual filing. The administrator instead files a one-time statement with the DOL electronically within 120 days of establishing the plan, and no further annual reporting is required.7U.S. Department of Labor. Top Hat Plan Statement
Apprenticeship and Training Plans
Plans that provide only apprenticeship or training benefits can qualify for an exemption, but it isn’t automatic. The administrator must file a notice with the DOL, take reasonable steps to disclose the required information to eligible employees, and make the notice available on request. Plans that skip those steps stay on the hook for the annual filing.8U.S. Department of Labor. Circular 93-01 – Exception from Reporting and Disclosure Requirements for Apprenticeship and Training Plans
How Participants Are Counted
Whether a plan is “large” or “small” depends on the participant count at the beginning of the plan year. For plan years beginning on or after January 1, 2023, the DOL changed the counting method for retirement plans. You now count only participants who have an account balance, not everyone who is eligible. Employees who could have enrolled but never did no longer inflate the headcount. Retirees, deceased participants, and separated employees with money still in the plan do count.
The 80-120 Transition Rule
Plans that hover near the 100-participant line get some breathing room. If your plan filed as a small plan last year and the count at the start of this year lands between 80 and 120, you can continue filing as a small plan and skip the independent audit. Once the count hits 121 or more at the start of a plan year, you must file as a large plan with a full audit.9eCFR. 29 CFR 2520.104-46 Waiver of Examination and Report of an Independent Qualified Public Accountant for Employee Benefit Plans With Fewer Than 100 Participants
Which Version of Form 5500 to File
Three versions exist, and the right one depends on plan size, how assets are invested, and whether any common-law employees participate.
Full Form 5500
Every large plan with 100 or more participants at the beginning of the plan year files the full Form 5500 with its complete set of financial schedules. An Independent Qualified Public Accountant must examine the plan’s financial statements and issue an opinion that gets attached to the return. The full Form 5500 must be filed electronically through the DOL’s EFAST2 system.10U.S. Department of Labor. FAQs on EFAST2 Electronic Filing System
Form 5500-SF (Short Form)
The Short Form is available to a small plan that meets every one of the following conditions:
- Fewer than 100 participants at the beginning of the plan year
- No employer securities or employer real property
- All assets invested in instruments with a readily determinable fair market value, such as mutual funds or publicly traded securities
- Qualifies for the independent auditor waiver
A plan that meets all four skips the independent audit and files a substantially reduced set of schedules.11U.S. Department of Labor. Instructions for Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan The 5500-SF is also filed electronically through EFAST2.
Form 5500-EZ
The 5500-EZ is reserved for one-participant plans (owner-only or partners-only, with no common-law employees) that have crossed the $250,000 asset threshold.12Internal Revenue Service. Instructions for Form 5500-EZ Unlike the other two, the 5500-EZ can be filed on paper and mailed to the IRS. Sponsors who file 10 or more returns of any type with the IRS during the calendar year, however, must file the 5500-EZ electronically through EFAST2, and that 10-return threshold counts all types of IRS returns, not just retirement plan forms.13Internal Revenue Service. Mandatory Electronic Filing for Certain Form 8955-SSA and 5500-EZ Returns
When It’s Due
Once you know a filing is required, the deadline is the last day of the seventh month after the plan year ends. For calendar-year plans, that means July 31.14Internal Revenue Service. Form 5500 Corner The plan administrator named in the plan document, usually the sponsoring employer, signs the return under penalty of perjury and is personally responsible for filing it accurately and on time.