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The Department
of Labor (DOL), the Pension Benefit Guaranty Corporation (PBGC) and the
Internal Revenue Service (IRS) have compiled the following practical,
common sense tips for some of the most frequently occurring Form 5500
filing problems. We hope these tips will reduce the number of basic filing
errors we encounter when processing the Form 5500 and Form 5500-EZ
returns, and also help you avoid getting EFAST correspondence regarding
these basic mistakes. You can get more information in the DOL’s Trouble
Shooter’s Guide to Filing the ERISA Annual Report (Form 5500), which
is available on the DOL Internet site at www.dol.gov/ebsa. Also, filers
with questions can call the EFAST Help Line at 1.866.463.3278. |
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The Internal Revenue Service reminds employers that
they no longer have to file an annual Form 5500 and Schedule F for
so-called “pure fringe benefit plans.”
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Employers who in the past filed Form
5500 and the Schedule F (Fringe Benefit Plan Annual Information
Return), solely to meet the reporting requirements of Internal Revenue
Code section 6039D ("fringe benefit plans"), should file
neither Form 5500 nor Schedule F. In fact, the Schedule F has been
eliminated and the Form 5500 has been modified so fringe benefit plan
information cannot be reported.
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Fringe benefit plans are often
associated with ERISA group health plans and other welfare benefit
plans. The IRS announcement regarding fringe benefit plans does not
cover these associated welfare plans. But, in many cases, a Form 5500
was not required for the welfare plan because it was exempt from
filing a Form 5500 report under Department of Labor regulations. For
example, fully insured or unfunded welfare plans covering fewer than
100 participants at the beginning of the plan year are eligible for a
filing exemption. Unless exempt, however, ERISA welfare plans must
still file in accordance with the Form 5500 instructions on welfare
plan filing requirements.
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See IRS News Release No. IR 2003-89
and the Form 5500 instructions for more information.
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Failing to sign the form is the number one reason that
filers receive correspondence from the government regarding their Form
5500 or Form 5500-EZ. Make sure that you have the proper signatures and
dates on the Form 5500, Form 5500-EZ, and any attached schedules that
require a signature (Schedules B, P and SSA). |
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The type of plan or DFE filing the Form 5500 determines
who is required to sign the form. Please consult Section 4 of the
Instructions for Form 5500, under the heading "How to File", for
information on who is required to sign your return/report. |
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Remember, if you choose to file electronically, the
plan must keep in its records an original copy of the Form 5500 filing
with all required signatures. |
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It is critical that the Employer Identification Number
(EIN) used to identify the “plan sponsor” be the same year to year
when completing line 2b of the Form 5500 or Form 5500-EZ. Switching EINs
without reporting the change on line 4 of the Form 5500 or Form 5500-EZ
will disrupt proper processing of your form and cause correspondence with
the filer. Also, the same EIN must go on Line D of all the attached
schedules (except Schedule P which reports the EIN of the plan’s
employee benefit trust(s) or custodial account(s)). |
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A multiple-employer plan or plan of a controlled group
of corporations should select one of the participating employers to list
as the plan sponsor and use that employer’s EIN on line 2b. If the plan
sponsor is a group of individuals (e.g., a board of trustees of a
collectively bargained plan) get a single EIN for the group. In the case
of a Form 5500 filed for a Direct Filing Entity (DFE), use the EIN
assigned to the CCT, PSA, MTIA, 103-12 IE or GIA. |
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The three-digit plan number (PN), in conjunction with
the EIN, is used as a unique 12-digit number to identify the plan or DFE.
Although EINs are obtained from the IRS, the plan sponsor/employer or plan
administrator assigns the PN. Also, once a three-digit plan number and
your EIN is used for one plan or DFE it cannot be used for any other of
your plans or DFEs, even after the plan or DFE terminates. |
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Plan administrators, plan sponsor/employers and DFE
sponsors should assign PNs as follows. Plans providing pension benefits
(such as profit-sharing or money purchase plans) should be assigned plan
numbers starting with 001 and consecutive numbers should be assigned to
other pension plans (e.g., 001, 002, 003, etc.). The sponsor of an MTIA,
CCT, PSA or 103-12 IE filing as a DFE should also start with number 001
and consecutive numbers should be assigned to other DFEs of the sponsor.
Welfare plans and group insurance arrangements (GIAs) filing as DFEs
should be assigned plan numbers starting with 501 and consecutive numbers
should be assigned to other welfare plans and GIAs (e.g., 501, 502, 503,
etc.). Do not use 888 or 999 as a PN. |
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Consult the Form 5500 filing instructions for line 1b
and 2b in Section 6, “Line-by Line Instructions”, for additional
information on EINs and PNs. The instructions for Line 2b include
information on how to obtain EINs from the IRS. |
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Be certain the time period entered in Part I of the
Form 5500 is not greater than twelve months. If the plan year is a
calendar year (January 1 through December 31) the spaces provided for
dates in Part I may be left blank. If the plan or DFE is not reporting on
a calendar year basis, but instead using a fiscal year, then input the
twelve-month (or shorter) fiscal year period in the spaces provided.
Example: fiscal year beginning 07/01/2002 and ending 06/30/2003. |
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Make certain that there is no gap between the ending
date of your previous year’s Form 5500 and the beginning date of the
current year’s form. Take special care if filing a Form 5500 for a short
plan year (a plan or DFE year of less than twelve months), for instance,
if the plan or DFE changes from a calendar year to a non-calendar fiscal
year. In that case, the beginning date entered on the “short plan year”
Form 5500 should be one day after the ending date of the previous year's
Form 5500 and the ending date should be one day before the beginning date
entered on the next year’s Form 5500. In addition, Line B(4) should be
checked on the short plan year Form 5500. Please refer to the Form 5500
filing instructions, Section 4 ("How to File" and "Change
in Plan Year"), for additional information. |
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The plan year beginning and ending date on all attached
Schedules (except Schedule P) must match the plan year beginning and
ending dates on Part I of the Form 5500. |
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Even if you consider a plan to have been terminated, a
Form 5500 and all necessary schedules are required to be filed until all
assets have been distributed to the participants, legally transferred to
the control of another plan, or reverted to the employer; and all
liabilities for which benefits may be paid under a welfare benefit plan
have been satisfied. Except as noted below for certain defined benefit
pension plans, a plan should not check the “final return/report” box
on Line B(3) of the Form 5500 and report having participants at year-end
on Line 7 of the Form 5500 or report having assets and liabilities at the
end of the year on the Schedule H or I. |
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If a trustee is appointed for a terminated defined
benefit plan subject to ERISA section 4042, the last year for which a
return/report must be filed is the year in which the trustee is appointed.
For the final reporting year, check the “final return/report” box on
line B(3) of the Form 5500, report the number of participants at year–end
on line 7 on the Form 5500, enter Code 1H on line 8a of the Form 5500, and
report the value of the assets and liabilities at the end of the year on
the Schedule H or I, as applicable. |
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A welfare plan that does not expect to file a Form 5500
for the next plan year because the plan has become eligible for the Form
5500 filing exemption for small unfunded, insured or combination unfunded
and insured welfare plans should not check Line B(3) on the Form 5500 but
should enter Code 4R on line 8b. |
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Please refer to the Form 5500 filing instructions in
section 4 under the heading "Final Return/Report" and in section
6 regarding Line B(3) for more information. |
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On Form 5500, Line 2d, be certain to enter a valid
business code that best describes the nature of the plan sponsor's
business. |
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The only business codes that are valid for use in
answering Line 2d are listed in the Form 5500 filing instructions section
marked “Codes for Principal Business Activity”. If more than one
employer and/or employee organization is involved, the business code for
the main business activity of the employers and/or employee organizations
should be entered. |
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Business codes may change from year to year. Therefore,
the business code used for your last year’s filing may not be a valid
business code for the current year filing. You should select the
appropriate business code from the Form 5500 filing instructions section
marked “Codes for Principal Business Activity” (e.g., if filing a 2002
Form 5500, the business code you select should be one of the business
codes from the 2002 instructions). |
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On Form 5500, Line 8, you must check box A and/or B to
indicate if the plan is providing pension benefits and/or welfare
benefits. |
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After indicating which benefits are being provided by
checking box A and/or B, you must enter the Plan Characteristics Codes in
the space provided beneath boxes A and/or B. These codes describe the type
of pension and/or welfare benefits provided and other features of the
plan. A list and description of the Plan Characteristics Codes is in
Section 6 of the Instructions for Form 5500. |
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An individual account pension plan like a money
purchase plan or profit-sharing plan (including a 401(k) arrangement)
should enter on Form 5500 line 8 the appropriate “Defined Contribution
Pension Features” and “Other Pension Benefit Features” codes that
are listed in the Form 5500 instructions. Individual account plans would
not normally enter codes for “Defined Benefit Pension Features,” such
as 1A, 1B, or 1C. |
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Indicate all the proper Funding and Benefit
Arrangements on Form 5500, Lines 9a and 9b. The “Funding Arrangement”
is the method used for the receipt, holding, investment, and transmittal
of plan assets prior to the time the plan actually provides benefits. The
“Benefit Arrangement” is the method by which the plan provides
benefits to participants. |
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Be careful to indicate all the applicable Funding and
Benefit Arrangements. The responses on Lines 9a and 9b are
cross-referenced against information on Schedules H, I, and/or A, as
appropriate. Be careful to attach the appropriate financial or insurance
schedule (H, I, A) that corresponds to the Benefit and Funding
Arrangements you indicate. For instance, if "Trust" is indicated
as an Arrangement, then a Schedule H or I (as appropriate) should be
submitted with the Form 5500. Likewise if you indicate
"insurance" as a Funding and/or Benefit Arrangement, a Schedule
A should be filed with Form 5500 for any insurance contract with a
contract or policy year that ended with or within the plan year. |
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Please refer to the Form 5500 filing instructions,
section 6 "Line-by-Line Instructions", for a description of the
Funding and Benefit Arrangements. |
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Make sure you
are filing all the required schedules and attachments with your Form 5500.
The Form 5500 instructions in Section 5, under the heading "What to
File", break down filing requirements based on type of filer (large
plan, small plan, pension plan, welfare plan, or DFE), and include a Quick
Reference Chart that lists each of the Form 5500 schedules and identifies
who has to file them. |
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The information you enter in the checklist on line 10
of the Form 5500 must match schedules that are submitted with the Form
5500. If you check a box indicating that a schedule is attached, the
schedule must be submitted with your Form 5500. |
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If you are filing Schedules A, P, or T, take special
care to enter the total number of each schedule you are filing in the
spaces provided on Line 10. |
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Make sure you file the proper Financial Information
Schedule with your Form 5500. The Schedule H is for “large plan”
filers (generally plans with 100 or more participants at the beginning of
the plan year) and all DFEs. The Schedule I is for “small plan” filers
(generally plans with fewer than 100 participants at the beginning of the
plan year). |
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If you filed as a “small plan” last year and the
number of plan participants is fewer than 121 at the beginning of this
plan year, you may continue to file Schedule I as a “small plan” under
the “80-120 Participant Rule.” This rule allows plans with between 80
and 120 participants at the beginning of the plan year to file the Form
5500 in the same category (“large plan” or “small plan”) as the
prior year filing. Please consult Section 5 of the Instructions for Form
5500 under the “What to File” heading for more information on the “80-120
Participant Rule”. |
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Certain Code section 403(b) retirement arrangements,
IRA pension plans, fully insured pension plans, and insured, unfunded, or
combination insured/unfunded welfare plans do not have to file Schedule H
or I. Please consult Section 5, under the heading "Limited Pension
Plan Reporting" and "Welfare Benefit Plan Filing
Requirements" in the Instructions for Form 5500, for additional
information and eligibility requirements. |
If you are
filing Schedule H or I, make certain that all required information
provided is accurate and complete. Make sure the spaces on the
asset/liability and income/expense statements (lines 1 and 2) on the
Schedule H and I that require a total from the lines above are completed
accurately. |
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Schedule H:
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If Schedule H is filed, Part III of
the schedule, regarding the independent qualified public accountant's
(IQPA) report and opinion, must be completed. The report of the IQPA
identified on Line 3 must be attached to the Form 5500 unless Line
3d(1) or 3d(2), (3b(1) or 3b(2) on 2002 and prior year forms) is checked.
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Plans filing Schedule H must answer
all items in Part IV, Lines 4a through 4k and Line 5a. Check either
“yes” or “no” as appropriate, and, where applicable, enter the
dollar amounts or other information that is required. Not responding
or indicating “n/a” to an item may cause the filing to be
rejected.
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MTIAs, 103-12 IEs, and GIAs should
leave Schedule H, lines 4a, 4e, 4f, 4g, 4h, 4k, and 5 blank. 103-12
IEs also do not complete 4j.
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Schedule I:
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When filing Schedule I, be certain
that the amounts entered on Part I, lines 3a through 3g (Specific
Assets of the Plan) are the year-end values for the assets. The
purchase price for an asset that was purchased during the plan year is
not necessarily the year-end value. Also, if the plan sold an asset
reportable on lines 3a through 3g during the plan year, a “0”
should be entered on the appropriate line in the amount column if
there were no other asset values to report on that line.
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The amounts entered on Schedule I,
Line 3f, "Loans (other than to participants)", should be the
value of the loans that are an asset of the plan. Loans are assets to
be reported on line 3f if the plan loaned the amounts (other than
participant loans) or purchased loans originated by a third party. Do
not include amounts the plan borrowed; amounts the plan owes should be
reported as a liability on Schedule I, line 1b.
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Plans completing Schedule I must
answer all items in Part II, Lines 4a through 4k and Line 5a. Check
either “yes” or “no” as appropriate, and, where applicable,
enter the dollar amounts or other information that is required. Not
responding or indicating “n/a” to an item may cause the filing to
be rejected.
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The Form 5500 must be submitted in its entirety with
all required schedules and attachments (including the report of the
independent qualified public accountant, if applicable). |
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Loose schedules and attachments filed without a
completed Form 5500 or amended Form 5500 will not be considered filed or
processed. However, government, church or other plans that elect
voluntarily to file the Schedule SSA are not required to attach the
schedule to a Form 5500 but must check box 1b on the Schedule SSA. See the
Schedule SSA instructions for more information. |
Hand print and
machine print forms generated by EFAST approved software will not be
processed if they are printed out blank, or with limited information, and
then completed by pen or typewriter. Only official hand print paper forms
printed by the IRS are allowed to be completed by pen or typewriter. |
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If the amended return/report is filed electronically,
submit a completed and dated Form 5500 with electronic signature (check
Box B(2) in Part I to indicate it is an amended return/report), and refile
all schedules and attachments, including those that are not being amended. |
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If the amended return/report is submitted in paper
form, submit a new completed, signed and dated Form 5500 (check Box B(2)
in Part I) and attach only the schedules or attachments that are being
changed from the prior filing. Do not attach schedules and attachments
that are not being changed. Do not attach schedules where only attachments
are being amended. Identify only the schedules that are being amended on
line 10 of Form 5500. If only attachments are being amended, do not
identify any schedules on line 10 of Form 5500. |
If you are
submitting a corrected Form 5500 in response to correspondence from EBSA
regarding processing of your return/report, do not check Box B(2) on the
Form 5500. |
