Form 5500 Filings for Calendar Year Plans – Due Date is Approaching

ERISA requires welfare benefit plans to file a Form 5500 each year unless the plan qualifies for the small plan exemption, or another regulatory exemption.

➡ For a calendar year plan, the deadline for filing a Form 5500 is July 31st.

Where do I start?

Start by making a benefits list. Identify the benefits the employer offers to employees. Which benefits are covered by ERISA? More familiar examples include medical, dental, vision, disability, and life coverages. But others include wellness programs, employee assistance programs (EAPs), on-site medical clinics, health flexible spending accounts (health FSAs), and health reimbursement arrangements (HRAs), group legal plans, and some voluntary benefits. Making a benefits list minimizes the likelihood a benefit subject to ERISA gets missed.

What if I have a small welfare benefit plan?

Small Plan Exemption. The regulations provide an exemption from the annual filing requirement for plans that (1) have less than 100 participants on the first day of the plan year, and (2) provide benefits from the employer’s general assets, through insurance, or through a combination of the two.
- Does the small plan exemption apply to any of the benefits on the list? Start by determining which benefits on the list had 100 or more participants on the January 1, 2016. With respect to those benefits, identify those that were paid out of the employer’s general assets, through an insurance policy, or a combination of the two. The benefits that meet both of the requirements are covered by the small plan exemption and do not have to file a Form 5500 for the 2016 plan year.
Benefits not covered by the small plan exemption. Benefits on the list that are not covered by the small plan exemption generally are required to file an annual return. There are a few other regulatory exemptions. But, in general, the benefits remaining on the list after the application of the small plan exemption require a Form 5500.

What if I missed a filing?

Penalties for not filing. They can be big! The DOL has authority under ERISA Section 502(c)(2) to assess civil penalties of up to $1,100 per day, for a maximum $30,000 per year against plan administrators who fail or refuse to file Form 5500 annual reports on a timely basis. In practice, the DOL’s assessment of civil penalties for noncompliance with the annual report requirement against the plan administrator has been a penalty of $300 per day, up to a maximum of $30,000 per year for each year until a complete annual report is filed. Attention: There is no overall maximum or limits to this penalty, other than the $30,000 per year limit. Thus, if an employer fails to file Form 5500 for two years, a cumulative penalty of $90,000 ($60,000 for the filing that is late by two years plus $30,000 for the filing that is late by one year) may be assessed.
Delinquent Filer Voluntary Compliance Program. The Delinquent Filer Voluntary Compliance Program (“DFVC Program”), established in 1995, allows plan sponsors who are late or have never filed the required Form 5500 filings to take advantage of reduced penalties in return for bringing their filing obligations up to date.

Can I file a single Form 5500 for all of my benefits?

Maybe.
- Yes.
  - If an insurance contract offers multiple benefits under the same contract, then a single Form 5500 can be filed for those benefits.
  - If the employer sponsors plans that provide the same type of benefit (e.g., multiple group medical plans), then a single Form 5500 can be filed for those benefits.
  - If the employer has established a “bundled” or “wrap” plan that includes multiple benefits, then a single Form 5500 can be filed for those benefits. Note, to establish a “bundled” or “wrap” plan, the employer typically needs to adopt a written plan document specifically combining the benefits into a single ERISA plan (unless the benefits are provided under a single insurance contract as described above).
- No.
  - Unless one of the three situations described above exists, filing one Form 5500 for multiple benefits should be avoided. Upon audit from the IRS or DOL, without proper plan documentation that “bundles” or “wraps” different benefits together, an employer may be forced to “unbundle” or “unwrap” the benefits for any past filings (i.e., treat each benefit as a separate plan). This potentially could cause each unbundled plan to be out of compliance.