Terrence M. Burns, CPA, MSA  I  Supervisor

The reporting requirements for an employee benefit plan can be confusing – the EBP Team at EFPR Group has outlined some of the more common requirements for the Form 5500, the difference between large and small plans, and when it is necessary to engage an independent qualified public accountant.

Form 5500 and Form 5500-SF The reporting requirements set forth by the Internal Revenue Code and Titles I and IV of ERISA require employee benefit plans to file an annual report. This reporting requirement is typically satisfied by filing the Form 5500, Annual Return/Report of Employee Benefit Plan, or, Form 5500-SF, Annual Return/Report of Small Employee Benefit Plan. These forms have been developed by the Internal Revenue Services, Department of Labor, and the Pension Benefit Guaranty Corporation. A return must be filed every year for every pension benefit plan, welfare benefit plan and some direct filing entities (DFE’s). The Form 5500 versus the Form 5500-SF reporting requirements may differ depending on the size of the benefit plan as outlined below.

Large vs. Small Plans (& the 80-120 rule) A large plan is defined as a plan with 100 or more participants at the beginning of the year and will file the Form 5500. Small plans are defined as plans with fewer than 100 participants at the beginning of the year and may be eligible to file the Form 5500-SF. It is important to note that this number of participants does not only include active/enrolled participants, but rather includes all eligible individuals. For pension plans, a participant is anyone who satisfies the age and service requirements for participation. For welfare plans, an individual becomes a participant on the earliest date of the following events: the plan designated date on which an individual begins participation, the date on which the individual becomes eligible for a benefit, or the date on which an individual makes a contribution. In addition, per Department of Labor (DOL) regulations, plans that have between 80 and 120 participants at the beginning of the plan year are allowed to complete the Form 5500 in the same category (large plan or small plan) as was filed in the previous year.

Audit Requirement According to ERISA Section 103(a)(3)(A), benefit plans that file the Form 5500 as a large plan are generally required to engage an independent qualified public accountant (IQCA). A large plan Form 5500 filer must attach an IQPA’s opinion and accompanying financial statements and notes to its Form 5500. Note that under the DOL regulation mentioned previously, if it is the first year that a plan has between 100 to 120 participants, the plan is allowed to file the Form 5500 as a small filer if previously filed as such.

Due Dates Employee benefit plans must file the appropriate form (5500 or 5500-SF) and required schedules/attachments by the last day of the seventh (7^th) calendar month after the plan year end.  For example, a plan with a calendar year end of December 31, 2016 has a filing deadline of July 31, 2017.  A plan can extend this deadline an additional two and a half (2.5) months by filing Form 5558 on or before the original due date.  Continuing with the previous example, filing Form 5558 on or before July 31, 2017 would extend the filing deadline to October 15, 2017.

Terrence M. Burns: Terrence M. Burns, CPA, MSA, is a Supervisor in EFPR Group’s Attest department.  Terrence has acquired experience in numerous industries including: manufacturing, technology, energy, not-for-profit organizations, and public companies.  He prepares and reviews financial statement audits, reviews, and compilations for a variety of clients.  Other responsibilities include: inventory observations, risk assessment, bookkeeping, Form 990’s and financial statement preparation.