Don’t Forget Upcoming ERISA-Filing Deadline

July 14, 2017 2:20 PM
By Brian Dobbis

Qualified retirement plans on a calendar year must file Form 5500 by July 31, unless an extension is requested. Beware of late-filing penalties.


Every year, qualified retirement plans subject to the Employee Retirement Income Security Act (ERISA) must navigate through countless filing deadlines—and Form 5500, “Series Annual Return/Report of Employee Benefit Plan,” is no exception.  

ERISA-covered plans on a calendar year should be reminded that the July 31st Form 5500 filing date for the 2016 plan year is only weeks away.

The term “Form 5500” actually refers to the one issued annually by both the Department of Labor (DOL) and the Internal Revenue Service (IRS). Currently, there are a few forms—Form 5500, Form 5500-SF, and Form 5500-EZ—to choose from; as to which form should be used, it depends upon the number of plan participants, among other things.

Form 5500 satisfies the obligations to file an annual report regarding the plan’s financial conditions, investments, and operations. Form 5500 is an important compliance, research, and disclosure tool for both the DOL and the IRS. Further, it’s part of ERISA’s reporting and disclosure framework work ensuring employee benefit plans are operated within the framework of the laws governing qualified employee benefit plans.

Form 5500 must be filed by the end of the seventh month after the end of a plan year. Since most plans set their plan years to the calendar year, most plans have to file Form 5500 by July 31. In other words, calendar-year plans must file the 2016 Form 5500 by July 31, 2017. However, a plan may obtain a one-time extension to file Form 5500 (for up to two and a half months) by filing IRS Form 5558  on or before the normal due date, thereby pushing the deadline to October 15 for calendar-year plans.

Plan Types Required to File Form 5500
Qualified plans subject to ERISA are required to file Form 5500. However, certain plans are not required to file Form 5500, including governmental plans, non-electing church plans, IRAs (including SEP and SIMPLE IRAs), and non-ERISA 403(b)s.

How Are One-Participant 401(k) Plans Treated?
A Solo 401(k) (also referred to as a ”Uni(k),” or “Owner Only”) was created specifically for small businesses, such as sole-proprietors and independent contractors. A one-participant plan covers only an owner (and his or her spouse) or one or more partners (and their spouses) in a partnership.

Solo(k)s are not required to file if plan assets do not exceed $250,000. Upon satisfying the assets threshold, plans may file Form 5500-EZ. However, the filing exception does not apply in the final year (i.e., the year in which the assets are fully distributed after such a plan termination), even if the assets are less than $250,000, and even if a Form 5500-EZ was never previously filed.  Form 5500-EZ is due on July 31, 2017, for the 2016 tax year.

What Are the Penalties for Late Filings (or Not Filing) Form 5500?
The penalties for noncompliance are severe. Further, both the IRS and DOL each have their own penalty structure. The former is $25 per day, up to a maximum of $15,000; the latter can be up to $1,100 per day, with no maximum.

However, to encourage voluntary compliance with ERISA’s annual reporting requirements, the DOL, in 1995, adopted the Delinquent Filer Voluntary Compliance [DFVC] program, and was updated in 2002. The DFVC program allows plan administrators that fail to file timely 5500 returns to pay reduced civil penalties. The IRS included the goals of the DFVC program, which stated that the IRS would not impose penalties on a plan administrator that satisfies the filing requirements of the DOL’s DFVC program with respect to a late filing of Form 5500.   

Accordingly, complying with the DOL’s DFVC program in effect gave plan administrators a reprieve from both the harsh DOL and IRS penalties.

Please note that this is a very brief overview of Form 5500. Be sure to address any questions you may have to your third-party administrator.


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