Employee benefit plans are required to file an annual report of plan activity with the Employee Benefit Security Administration via a Form 5500. This article details what a Form 5500 Annual Return/Report of Employee Benefit Plan is, what’s required to complete it, when it‘s due, and how Guideline will assist with your 5500 filing and any third party audits that may be required.
What is a Form 5500?
The Form 5500 is a report of plan activity that must be filed for your 401(k) plan each year. The form requires plans to disclose financial and operational details, which are used by the Department of Labor, Internal Revenue Service, and the Pension Benefit Guaranty Corporation for research and compliance purposes.
The annual report requires disclosure of:
- General plan information & service providers
- Number of participants
- Financial data, such as assets, liabilities, income, expenses and transfers
- Types of benefits provided for under the plan
- Operational activities
- Plan funding
When is the Form 5500 filing due?
Form 5500 is due on the last day of the 7th month after the end of the plan year. For calendar year plans, this is July 31st. For plans requiring a long form 5500, Guideline typically files an automatic extension until October 15th to ensure ample time for completing a plan audit. Generally, an audit is not required for plans with fewer than 100 participants, which is discussed in more detail below.
How is it filed?
Form 5500 must be filed electronically using the EFAST2 protocol.
Does Guideline handle Form 5500 filings?
Guideline’s services include preparation and electronic filing of the Form 5500, at no added cost, as long as contributions were made to your Guideline plan prior to the end of the filing year. This means that if you transferred your plan to Guideline earlier this year, and need to file your Form 5500 for the previous plan year, you should work with your prior administrator to file your report.
What will I need to do?
In most cases, Guideline will have adequate information about your plan to prepare and file the Form 5500.
If you transferred your plan to Guideline in the middle the reporting year, Guideline may contact you to request additional details for purposes of Form 5500 preparation.
As explained above, if you did not make contributions to your Guideline plan during a particular plan year (i.e. in the event of a change of service providers), Guideline will not be able to assist with your filing and you should work with your prior administrator to file your report.
Where can I find the Form 5500 filed by Guideline?
Copies of recent and prior year Form 5500 filings are available in your dashboard for your review.
Large plans will require a third party plan audit
Some large plans are required to undergo an annual examination and evaluation of the plan’s financial statements. Such audits must be conducted by an independent CPA and a report must be submitted with your Form 5500. If your plan does require an audit, Guideline is able to offer the services of our preferred audit partner to conduct an audit and invoice you for the cost of the audit, which may range from $6,500 to $10,000 depending on the complexity of your plan. Most plans with 100 or fewer participants can waive audit requirements.
When does the audit need to be performed?
The audit must be completed between February and June in order to provide ample time for the filing of your Form 5500 by the July 31 deadline.
Guideline’s Audit Partner
Pension Assurance LLP, Guideline's preferred audit partner, is a specialized, single-service CPA firm dedicated firm-wide and year-round to one service offering: ERISA retirement plan audits. Pension Assurance performs over 300 plan audits a year, and focuses specifically on retirement plans. It takes about 6 weeks from the date of receipt of the audit package for Pension Assurance to complete the audit. Test work, which takes about half a day, can be done remotely or on-site.
Though Guideline has partnered with Pension Assurance to provide a streamlined audit package to help reduce the overall audit cost to our shared clients, you are encouraged to obtain other quotes to ensure you perform your due diligence in selecting a qualified service provider who charges reasonable fees.