September 21, 2023

The extra subtle your corporation turns into, the extra your administrative tasks improve. When you rent workers, you tackle compliance duties associated to payroll and advantages, which frequently embody submitting Type 5500.

Type 5500 is part of the annual reporting necessities for many who sponsor worker profit plans. Right here’s what you must learn about it, together with the shape’s goal and the best way to file it.

What Is A Type 5500?

The Form 5500 Series is a bunch of paperwork that should be filed yearly by employers who sponsor worker profit plans, to adjust to necessities within the Worker Retirement Earnings Safety Act (ERISA) and Inner Income Code (IRC).

The Inner Income Service (IRS), Division of Labor (DOL), and Pension Profit Warranty Company (PBGC) designed the collection collectively. It contains a number of Type 5500 variations for various plan sizes and a number of accompanying schedules.

Typically, you could file a Type 5500 for every pension and welfare profit plan you sponsor. Pension plans embody 401(okay) and profit-sharing plans, whereas welfare plans present advantages like medical, dental, and life insurance coverage.

Authorities companies use the Type 5500 Collection to facilitate a number of processes. Its major goal is to provide them the info they should confirm that you just’re complying with rules and performing in your workers’ finest pursuits.

Nevertheless, it’s additionally a beneficial supply of knowledge that may assist the federal authorities, together with Congress, assess worker advantages, tax, and financial tendencies. Lastly, it serves as a disclosure doc for plan individuals and beneficiaries.

Who Should File Type 5500?

Typically, if your corporation sponsors a number of worker profit plans, you could file Type 5500. Which model you might want to submit relies on the dimensions and construction of your organization. Listed below are the choices and their major eligibility necessities:

  • Type 5500 – That is essentially the most detailed model of the doc. It’s required when your worker profit plan has 100 or extra individuals.
  • Type 5500-SF This can be a barely streamlined model of the doc. It is best to file it as an alternative of the default model in case your worker profit plan has fewer than 100 individuals at the beginning of the related calendar 12 months. 
  • Type 5500-EZ That is essentially the most simplified model of the doc and is just for one-participant plans. Meaning you should use it just for a retirement plan that covers your self (otherwise you and your partner).

Notably, a couple of exemptions routinely excuse you from having to file any of the Type 5500 variations, even when you’ve got an in any other case qualifying worker profit plan.

For instance, you don’t want to finish a Type 5500 to your worker profit plan when you’re a authorities entity or if it’s a one-participant account with lower than $250,000 in belongings beneath administration.

For a complete record of exemptions, seek the advice of the official Form 5500 Series Instructions documents.

How To File Type 5500

You possibly can nonetheless file many tax kinds by sending paper copies by means of conventional mail, however most elements of the Type 5500 Collection are an exception. When you file Type 5500 or Type 5500-SF, you could achieve this electronically.

Solely with a one-participant plan that qualifies for Type 5500-EZ are you able to file with a paper copy by mailing it to the Division of the Treasury. Nevertheless, it’s typically simpler to file electronically, even when it’s not required.

To file Type 5500 Collection paperwork electronically, you could use the devoted web-based submitting system, often known as EFAST2.As of January 1, 2023, you could signal as much as entry it utilizing, which gives one consumer ID and password for all collaborating governmental companies. If you have already got EFAST2-issued credentials, they are going to be phased out by September 1, 2023.

When Is Type 5500 Due?

When you sponsor an worker profit plan that requires you to file a Type 5500, you typically have till the final day of the seventh month after your plan 12 months ends to submit the required paperwork.

For instance, in case your plan 12 months ends on December 31, 2023, you’d have till July 31, 2024, to file the suitable model of Type 5500 and its accompanying schedules by means of EFAST2.

Nevertheless, you possibly can request an extension by submitting Form 5558 on or earlier than your due date. It can push the deadline by two and a half months to the fifteenth day of the third month after your authentic due date.

When you suspect you possibly can’t file on time, ensure you file your extension. The penalties for submitting Type 5500 late are considerably larger than common, reaching as much as $2,400 per day that you just fail or refuse to file an entire and correct report.

When you need assistance to fulfill your Type 5500 submitting necessities, take into account consulting a Licensed Public Accountant with related expertise. They’ll stroll you thru the method and reply any questions you have got.