The extra subtle your corporation turns into, the extra your administrative tasks enhance. When you rent staff, you tackle compliance duties associated to payroll and advantages, which regularly embrace submitting Kind 5500.
Kind 5500 is part of the annual reporting necessities for individuals who sponsor worker profit plans. Right here’s what it’s best to find out about it, together with the shape’s goal and methods to file it.
What Is A Kind 5500?
The Form 5500 Series is a bunch of paperwork that should be filed yearly by employers who sponsor worker profit plans, to adjust to necessities within the Worker Retirement Earnings Safety Act (ERISA) and Inside Income Code (IRC).
The Inside Income Service (IRS), Division of Labor (DOL), and Pension Profit Warranty Company (PBGC) designed the collection collectively. It consists of a number of Kind 5500 variations for various plan sizes and a number of accompanying schedules.
Usually, you should file a Kind 5500 for every pension and welfare profit plan you sponsor. Pension plans embrace 401(okay) and profit-sharing plans, whereas welfare plans present advantages like medical, dental, and life insurance coverage.
Authorities companies use the Kind 5500 Collection to facilitate a number of processes. Its major goal is to offer them the information they should confirm that you just’re complying with rules and performing in your staff’ greatest pursuits.
Nonetheless, it’s additionally a precious supply of knowledge that may assist the federal authorities, together with Congress, assess worker advantages, tax, and financial tendencies. Lastly, it serves as a disclosure doc for plan individuals and beneficiaries.
Who Should File Kind 5500?
Usually, if your corporation sponsors a number of worker profit plans, you should file Kind 5500. Which model it’s essential to submit is determined by the dimensions and construction of your organization. Listed here are the choices and their major eligibility necessities:
- Kind 5500 – That is essentially the most detailed model of the doc. It’s required when your worker profit plan has 100 or extra individuals.
- Kind 5500-SF – This can be a barely streamlined model of the doc. You must file it as an alternative of the default model in case your worker profit plan has fewer than 100 individuals in the beginning of the related calendar yr.
- Kind 5500-EZ – That is essentially the most simplified model of the doc and is just for one-participant plans. Meaning you should use it just for a retirement plan that covers your self (otherwise you and your partner).
Notably, a number of exemptions mechanically excuse you from having to file any of the Kind 5500 variations, even in case you have an in any other case qualifying worker profit plan.
For instance, you don’t want to finish a Kind 5500 to your worker profit plan in case you’re a authorities entity or if it’s a one-participant account with lower than $250,000 in belongings beneath administration.
For a complete checklist of exemptions, seek the advice of the official Form 5500 Series Instructions documents.
How To File Kind 5500
You may nonetheless file many tax types by sending paper copies by way of conventional mail, however most components of the Kind 5500 Collection are an exception. In case you file Kind 5500 or Kind 5500-SF, you should accomplish that electronically.
Solely with a one-participant plan that qualifies for Kind 5500-EZ are you able to file with a paper copy by mailing it to the Division of the Treasury. Nonetheless, it’s usually simpler to file electronically, even when it’s not required.
To file Kind 5500 Collection paperwork electronically, you should use the devoted web-based submitting system, often known as EFAST2.As of January 1, 2023, you should signal as much as entry it utilizing Login.gov, which offers one consumer ID and password for all collaborating governmental companies. If you have already got EFAST2-issued credentials, they are going to be phased out by September 1, 2023.
When Is Kind 5500 Due?
In case you sponsor an worker profit plan that requires you to file a Kind 5500, you usually have till the final day of the seventh month after your plan yr ends to submit the required paperwork.
For instance, in case your plan yr ends on December 31, 2023, you’d have till July 31, 2024, to file the suitable model of Kind 5500 and its accompanying schedules by way of EFAST2.
Nonetheless, you’ll be able to request an extension by submitting Form 5558 on or earlier than your due date. It can push the deadline by two and a half months to the fifteenth day of the third month after your authentic due date.
In case you suspect you’ll be able to’t file on time, be sure you file your extension. The penalties for submitting Kind 5500 late are considerably greater than common, reaching as much as $2,400 per day that you just fail or refuse to file an entire and correct report.
In case you need assistance to fulfill your Kind 5500 submitting necessities, take into account consulting a Licensed Public Accountant with related expertise. They’ll stroll you thru the method and reply any questions you’ve got.