If you are the Plan Sponsor for a 401(k) Plan, you will be required to file a Form 5500 for your Plan each year. The Form 5500 is an Internal Revenue Service (IRS) informational return that provides data to both the IRS and Department of Labor (DOL) regarding each retirement plan. Most Plans are required to complete the Form 5500 and your record-keeper will assist in preparation of the form.
If you have specific questions regarding the filing requirement for your Plan it is best to check with your service provider as they will have the information as it relates to your Plan. Some key items to understand about the Form 5500 filing are shown below.
- Timing – If your Plan is a calendar year Plan, the due date for filing the Form is July 31st of each year. You can receive an automatic extension until October 15th for the Plan but you must file a form with the IRS before the end of July due date to qualify for the extension. It’s very important to follow the guidelines regarding filing on time as penalties apply for non-compliance and they are assessed daily from the original due date of the form. If your Plan is on a fiscal year basis, the form is due seven months after the year-end date for your Plan. The extended date is 10 ½ months from the year-end date.
- Data required – The information required is based upon the type of plan, activity that occurred, and the number of participants. If your Plan has over 100 eligible participants (this includes those participating in the Plan and those employees eligible to participate but have chosen not to), you will be required to file a Long Form 5500 which requires more information and could potentially require an audit. Those with fewer participants can file a Short Form. It is best to verify with your service provider the type of Form required for your situation. The service provider, in most cases, prepares the actual form based upon information they have about the Plan but they will provide a questionnaire to you to gather additional required information. Make sure you complete all the requested information requests timely. If you are unsure of a question that is being asked, verify with your provider before making assumptions.
- Filing – Once the form has been completed, reviewed and approved, it must be filed on the DOL E-Fast System. Paper submissions are no longer accepted. Make sure you have fully reviewed the form before submitting it. Ask questions about any items you are unsure of. Keep in mind that once the form is accepted by the system it will become public information. Work with your service provider to complete the filing using their procedures. They should be available for questions as you work through the filing steps. Once you have submitted the form, check back in a few days to make sure the filing was accepted without any errors.
The best resource to assist in completing the Form 5500 filing is your representative at the service provider for your Plan. If you need specific Form 5500 instructions, you can click on this dol.gov link to get Form 5500 instructions from the IRS.
As the plan sponsor, when it’s time to audit your plan, it’s vital that you hire an experienced auditor to ensure your plan is in compliance. At Summit CPA we specialize in retirement plan audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete. For assistance contact our office at (866) 497-9761 to schedule an appointment.