5500 Form 2022 Printable, Fillable PDF – If you’re a plan sponsor or administrator, you should avoid making these typical mistakes when submitting 5500 Form. Important facts, filing dates, and other information are provided below.
What Exactly Is Form 5500?
An annual report submitted to the United States Department of Labor (DOL) that covers information regarding a 401(k) plan’s financial status, investments, and operation is known as an IRS 5500 Form report. The form’s aim is to supply the Internal Revenue Service and the Department of Labor with information regarding the plan’s operation and compliance with federal rules.
In principle, all retirement plans, such as profit-sharing and 401(k) plans, are required to submit a 5500 Form for each year in which the plan has assets under management. Depending on the size of your company and the form of your retirement plan, you will need to complete a different version of the 5500 Form.
- 5500 Form is a generic business form that may be used by most public and private sector organizations with 100 or more members.
- Form 5500-SF is a short-form version of the 5500 Form that is used for plans with fewer than 100 members.
- According to the Internal Revenue Service, Form 5500-EZ is the prescribed form for plans with just one member, such as a single-owner firm that invests in a stand-alone retirement plan.
Form 5500 And The Success Of Your Small Company
Understanding 5500 Form is critical for firms that provide retirement plans…. Plan sponsors must deposit employees’ salary or wage deferrals into their accounts as soon as administratively feasible, but no later than the 15th business day of the month following the month in which the contributions were made. This is one of many fiduciary responsibilities that must be reported on 5500 Form.
Essentially, a plan is expected to make such deposits as soon as reasonably possible in order to be able to separate member contributions from the employer’s general assets. When it comes to small firms—defined as those with 100 or fewer workers—there is a safe harbor deadline that allows them to deposit employee deferrals into their retirement plans within seven business days of receiving them.
Form 5500 Submission Deadlines
In most cases, 5500 Form is normally due on the last day of the seventh month after the conclusion of the plan year, or on July 31 in the case of a calendar-year plan, in most cases (or the following business day if July 31 falls on a weekend). If you are unable to finish your form by July 31, you will need to submit a request for an extension with the IRS before July 31 in order to avoid penalties for late filing.
The plan administrator is responsible for electronically signing and submitting the 5500 Form to the Department of Labor. The plan administrator must also have a copy of the 5500 Form, including all schedules and attachments, on file with the plan’s records, as well as a copy of the 5500 Form with all requisite ink signatures on file with the plan.
Do You Believe You Will Be Late With Your 5500 Filing?
Form 5558: Application for Extension of Time to File Certain Employee Plan Returns may be used to file an extension for your company’s 5500 Form if you know ahead of time that you won’t be able to meet the initial submission date. Providing that the extension request is submitted in a timely and thorough manner, your 5500 Form0 will be due two and a half months after the original due date.
If you know you will be late, it is well worth the effort to complete Form 5558 as soon as possible. This may save you hundreds of dollars in fines and taxes. Keep in mind that Form 5558 must be submitted to the IRS before the filing date in order to be considered for an extension.
Have You Missed The Submission Deadlines?
It is still necessary to submit 5500 Form even if you have already missed the deadline and have not properly completed an extension request. Fortunately, the Internal Revenue Service realizes that errors sometimes occur, and there are penalty mitigation programs available for delinquent filers to assist them in reducing the penalties connected with late submissions of 5500 Form.
Non-ERISA plan sponsors who are delinquent in their filings may be eligible for penalty reduction under IRS Revenue Procedure 2015-32, while ERISA plan sponsors could pursue the Department of Labor’s Delinquent Filer Voluntary Compliance Program (DFVCP).
The 5500 Delinquent Filing Program Is Referred To As The DFVCP
If you fail to file 5500 Form on time, you will incur penalties that may rapidly mount up. However, the Delinquent Filer Voluntary Compliance Program can help you avoid fines that spiral out of control. The DFVCP is only available to plan administrators who have met their filing duties under Title 1 of ERISA and who have provided the Department of Labor with adequate notice that their 5500 Form has not yet been filed.
If you administer a private-sector employee benefits plan that was formed and managed by a private employer or a private employee group, your plan duties are most likely governed by Title 1 of the Employee Retirement Income Security Act of 1974 (ERISA).
More information can be found at:
The Internal Revenue Service (IRS) has released further guidance for businesses claiming the Employee Retention Tax Credit.
What Is The Cost Of 5550 Late Filing Penalties?
Late filers of 5500 Form may be punished twice—once by the Internal Revenue Service and once by the Department of Labor. The IRS fines for submitting a late tax return without providing notice or obtaining an eligible extension are $250 each day, up to a maximum of $150,000 in penalties. As if that weren’t enough, the Department of Labor may impose fines of up to $1,100 per day with no limit.
The DFVCP provides a maximum fine for late filers in order to promote reporting compliance and to assist plan administrators who have failed to submit an annual report for a plan for a number of years in getting their plans back on track. The maximum penalty for submitting a single late annual report is $750 for small plans and $2,000 for big plans for a single late submission. A “per plan” limitation, which limits total penalties to $1,500 for small plans and $4,000 for big plans, regardless of the number of late annual reports submitted for the plan at the same time, is also in place to restrict total penalties.
What Is The Procedure For Filing An Overdue Form 5500?
To submit an overdue 5500 Form, you would follow the same procedure as you would for any other on-time report. All filings are made using EFAST2, the Department of Labor’s approved electronic filing system. The overdue 5500 Form would be submitted online using EFAST2 using your DOL login credentials, and any supporting paperwork would be uploaded as well.
Annual report in a nutshell
In accordance with the Employee Retirement Income Security Act (ERISA), a summary annual report (SAR) summarizes the information provided on the 5500 Form and schedules and is required by the Act. The SAR must be given to each member and their beneficiaries who are eligible to receive benefits under the plan no later than two months after the 5500 Form filing date, which is typically Sept. 15 each year. If the client requested a filing extension, they have until December 15 to complete the process.
The SAR provides participants with a summary of the financial state of the plan, as reported on 5500 Form, in a concise format. Those who participate are also notified of their entitlement to get a copy of the 5500 Form if their employer requests one from them.
Is It Necessary To Have A Fidelity Bond For Retirement Plans?
Every plan fiduciary, as well as anybody else who manages or has the capacity to handle plan assets, is required to be protected by a bond under the Employee Retirement Income Security Act (ERISA). Forfeiture bonds are insurance policies that specify the plan as the insured party and cover anybody who handles or has the right to handle plan assets, such as trustees and administrators. The fidelity bond protects the plan against financial loss as a result of acts of fraud or dishonesty on the part of those who are obliged to be bonded.
Unless otherwise specified, the required bond coverage is equal to 10% of plan assets at the start of the plan year, or $500,000 in total.
Instructions For Submitting Form 5500: The Filing Procedure
The Department of Labor (DOL) mandates that all 5500 Form annual returns be submitted electronically using its EFAST2 system. Paper filings are no longer accepted by the agency, with the exception of those submitted via Form 5500-EZ.
Logging onto the EFAST2 processing system and beginning to fill out the right version of 5500 Form are both required before you can begin the filing procedure. EFAST2 works in a similar way to other online tax systems in that you will enter your identifying information, answer questions about your company and retirement plan data, and upload any supporting paperwork that is necessary. At the conclusion of the procedure, you will be requested to electronically sign the form and submit it to the IRS via the portal.
When completing your electronic filings, keep in mind that accuracy and completeness are critical considerations. While you may be subject to penalties or fines for failing to submit on time, the Department of Labor and the Internal Revenue Service (IRS) may also impose fines or penalties if your submission contains errors. For anything the IRS considers to be intentional violations or making false representations, penalties may apply. Additionally, the IRS may reject your 5500 Form if you submit inadequate information, including unanswered questions, which might result in late fines.
Filing Requirements And Credentials For The 5500
Please visit www.efast.dol.gov if you do not already have DOL electronic signature credentials; otherwise, please contact your employer. DOL credentials are the secure login and password that you use to check in to the EFAST2 portal and electronically sign and submit your completed paperwork to the Department of Defense. It is necessary to be allowed to submit 5500 Form on behalf of your company in order to receive DOL credentials, and you must also complete a registration procedure that takes around 15 minutes on average.
To create your Department of Labor credentials, follow these steps:
- Fill out the form with your personal information and the sort of user you are.
- Preparing your security questions and answers is essential (in case you forget your password in the future).
- Complete the registration process by clicking on the link in the confirmation email you received from EFAST2 to complete the registration process.
- Accept the PIN agreement and, if necessary, the signature agreement, and then establish your own password.
Form 5500 Mistakes Are Often Made
According to the IRS, it is possible that the DOL may conduct an employee plan compliance check if you input erroneous information or leave a box blank while filling out 5500 Form.
If you are preparing this form for your company, keep an eye out for some of the most typical mistakes, as listed by the Internal Revenue Service:
1. Making a note of plan members who have “zero” hours.
On 5500 Form, plan participants are defined as all qualified workers as well as those employees who have a balance in the plan. Frequently, businesses provide the incorrect response that there are no plan members. This mistake is very common with newly developed applications.
2. An excessive amount of deferral
Due to this oversight, the plan organizers have permitted contributions to exceed the yearly maximum that a member is permitted to make. The Internal Revenue Service discovered that certain 403(b) or 457 donations were mistakenly categorized as 401(k) deferrals.
3. The plan will be terminated.
The completion of 5500 Form is still necessary until all assets have been dispersed from the plan after a plan has been terminated. Documenting plans that have been discontinued is an important aspect of maintaining compliance during yearly reporting. The following are examples of common mistakes:
- Not submitting the required paperwork.
- Making the mistake of labeling a plan as “ended” when it wasn’t
- Making the mistake of thinking that a frozen plan has been cancelled
- It is permissible to use the same plan number for more than one plan.
- There is no way to identify the form as a final return on it.
- After all plan assets have been allocated, the balance sheet will show 0 assets.
4. The use of deception
5500 Form inquires as to whether a plan suffered a loss as a result of fraud or dishonesty. Employers often provide inaccurate responses in this area, according to the IRS. The majority of the time, this section should be left blank (assuming a company did not endure fraud).
5. Plans that have been put on hold
Code 1 indicates that a plan has been frozen or is no longer in effect. It has been reported that organizations have made the mistake of using code 1l for active accounts.
6. There are further hazards.
Here are a few more frequent errors to avoid while filling out 5500 Form for your own peace of mind:
- Filing incorrectly because the EIN and plan number were not entered properly.
- Providing excessive information, such as returns that are more than 12 months old.
- Inability to file your form because you did not use EFAST software or an authorized vendor.
It is necessary to include a substantial quantity of information on 5500 Form. It’s quite simple to make a mistake while entering codes or digits. Double-check your work to ensure that you do not make these blunders. Reread the form to make sure you’ve included all you need:
- To be sure you’ve answered the questions properly, go back over them.
- I double-checked to make sure all of the answers were in the right boxes.
- You’ve double-checked your codes to make sure you’ve captured everything correctly.
- We discouraged you from using answers from a prior year’s form.
- Professionals have reviewed your answers to make sure you’re answering each question properly.
A third-party administrator for your 401(k) and retirement services can assist you in successfully preparing to complete this form, as well as reduce your plan-related effort and risk exposure. 5500 Form is often prepared by plan administrators as part of their administration services, enabling you to just examine the document for correctness before signing and submitting the document.