Form 5500 Filing Season is in Full Swing!
Employers with plans with the following criteria have Form 5500 filing requirements for each respective plan.
- Insured plans and self-insured plans that are unfunded with 100 or more participants on the first date of the plan year, including but not limited to Health Care flexible spending accounts (FSAs), health reimbursement arrangement (HRAs), major medical, dental, long-term disability, accidental death & dismemberment (AD&D), or group term life insurance.
- Funded plans (plans that hold assets in a trust) regardless of the number of covered employees.
Church controlled groups and governmental entities (state, city, town, village, public school districts, etc.) are not subject to ERISA and are not required to file Form 5500 even if their plan participation exceeds 100 participants.
How do I count participants if I offer multiple benefits under a wrap plan?
Count each unique employee independently (do not include family members) if they are covered by one or more plans included in the wrap plan as of the first day of the plan year. If an employee is covered on three different benefits within the wrap plan, you count them as one participant. Note: This is different from data provided by insurance carriers on a Schedule A where an approximate number of covered lives is reported as of the last day of the plan year and includes a total of employees, spouses, and dependent children covered on the plan.
Consider the following example:
A wrap plan includes the employer’s medical, dental, and vision plans. To determine the Form 5500 filing obligation, the employer needs to identify the number of participating employees as of the first day of the plan year from payroll or billing records. The Schedule A is not reliable for this as the carrier provides the number of covered lives (employee, spouse, and children) on the last day of the plan year. The counts are:
- Medical Plan: 88 employees (152 covered lives)
- Dental Plan: 91 employees (124 covered lives)
- Vision Plan: 89 employees (110 covered lives)
When looking at each coverage type separately, it appears that a Form 5500 is not required because employee participation counts are less than 100 if you look at each coverage type separately; however, you first need to consider if there are employees on just one benefit or multiple benefits. Employees are only counted once for determining if you are required to a file Form 5500. The enrollments are:
- Medical only: 3 employees
- Dental only: 4 employees
- Vision only: 3 employees
- Medical & Dental: 5 employees
- Medical & Vision: 4 employees
- Dental & Vision: 6 employees
- Medical, Dental, & Vision: 76 employees
As you see, there are various ways that the plans overlap. The totals in each section are added together to get the unique participant count. When totaled, there are 101 employees participating in at least one of the lines of coverage (3+4+3+5+4+6+76). In this case, the wrap plan participation triggers the need to file a 5500 and that 5500 needs to include all necessary information for all benefits under the wrap plan.
What happens if the employer cannot file on time?
In the event that an employer cannot complete and electronically submit Form 5500 by the deadline for their plan year, a one-time 2 months and 15 day extension can be requested by submitting IRS Form 5558 through the U.S. Mail. For 2020 calendar year plans, the deadline to request this extension is 7/31/2021.
If the employer fails to request the extension by the filing deadline, there is a penalty of $50 per day for late returns with no penalty maximum, unless the employer uses the Delinquent Filer Voluntary Compliance Program (DFVC). The penalty is assessed per ERISA plan number for each plan year that is late.
For more information on DFVC, refer to What should an employer do if they never filed a Form 5500 or failed to file by the deadline?
Filing Extension Requests with Form 5558
To complete the Form 5558 for health and welfare plans, an employer must fill in the employer name, address, EIN, plan name, plan number, plan year ending date, and the Extension of Time sections. This information is generally found in the employer’s Summary Plan Description. The maximum extension the employer may request is 2 months and 15 days. The extension is granted automatically as long as the Form 5558 extension request is postmarked by the original filing deadline. If the employer is requesting an extension for the Form 5500 series, an employer signature is not required.
Although Form 5500 must be filed electronically, Form 5558 (which requests the filing extension) must be submitted via U.S. Mail or Private Delivery Service (DHL Express, Federal Express, and UPS). The mailing address for all extension requests is:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0045
Important: Failure to file Form 5500 by the extension deadline results in a $50 per day penalty assessment back to the original Form 5500 deadline.
For example: If you file Form 5558 and request an extension for your calendar year plan until 10/15/2021, but you do not file your Form 5500 until 10/20/2021 – the $50 per day penalty assessment applies back to the initial 07/31/2021 deadline date. An employer should be aware that ERISA compliance is very important and the Department of Labor (DOL) in 2021 has the authority to assess a penalty of up to $2,259 per day for failure to comply with 5500 filing obligations.
Form 5500 Preparation Services
Employee Benefits Corporation is able to assist employers with health and welfare plan Form 5500 preparation. We automatically prepare Form 5500s for employers with our BESTflex Plan when it is applicable. Employers with EBC HRA may request Form 5500 filing service for a fee. Employers who do not use our FSA or HRA administration services or need insured plan, self-funded plan, or wrap plan filings may separately contract with us for Compliance Services for 5500 preparation. Please contact sales@ebcflex.com for more information and pricing details.
Deadlines for Filing Form 5500
Includes the deadline with an extension, provided Form 5558 was filed timely.
| Plan Year End Date | Form 5500 (or Form 5558) Deadline | Form 5500 Deadline after Approved Extension |
| 12/31/2020 | 07/31/2021 | 10/15/2021 |
| 01/31/2021 | 08/31/2021 | 11/15/2021 |
| 02/28/2021 | 09/30/2021 | 12/15/2021 |
| 03/31/2021 | 10/31/2021 | 01/15/2022 |
| 04/30/2021 | 11/30/2021 | 02/15/2022 |
| 05/31/2021 | 12/31/2021 | 03/15/2022 |
| 06/30/2021 | 01/31/2022 | 04/15/2022 |
| 07/31/2021 | 02/29/2022 | 05/15/2022 |
| 08/31/2021 | 03/31/2022 | 06/15/2022 |
| 09/30/2021 | 04/30/2022 | 07/15/2022 |
| 10/31/2021 | 05/31/2022 | 08/15/2022 |
| 11/30/2021 | 06/30/2022 | 09/15/2022 |
| 12/31/2021 | 07/31/2022 | 10/15/2022 |
What should an employer do if they never filed a Form 5500 or failed to file by the deadline?
First and foremost, if the employer’s deadline for filing Form 5500 has not passed, they should file an extension request on Form 5558 right away. If the deadline has already passed, employers should consider their risk tolerance, the number of plans they have not filed, and the potential penalties to determine what the best course of action is for them.
There are three options available to employers:
- Do not file
- File late
- File late with Voluntary Compliance Program
Option 1: Do Not File
Employers can opt to not file; however, in the event that the late or missed filings are discovered during an audit, there is a potential consequence of $300 per day for each plan (per plan, per plan year) that is not filed or is not filed timely. Penalties cap at $30,000 per year. Keep in mind that in 2021 the Department of Labor (DOL) has the authority to impose a $2,259 penalty per day for failure or refusal to file a Form 5500.
Option 2: File Late
This assumes that the employer did not file an extension. There is a potential consequence of $50 per day for each plan (per plan, per plan year) that is filed late. There is no penalty cap in this situation.
Keep in mind, that in 2021 the Department of Labor (DOL) has the authority to assess a penalty of up to $2,259 per day.
Option 3: File Late with Voluntary Compliance Program
Employers can opt to file late under the Delinquent Filers Voluntary Compliance Program (DFVCP). Using the DFVCP is contingent on an employer taking steps to remedy the late or missing filing before it is discovered in the event of an audit. Under the DFVCP, penalties are significantly reduced and there is late fee of $10 per day for each plan (per plan per plan year) that is filed late. Penalties are capped at $2,000 per large plan or $750 per small plan. This is the penalty if an employer has a single plan year that is delinquent or the delinquent Form 5500s are filed at separate times. The penalty is assessed per each ERISA plan that is delinquent. The maximum penalty for employers with multiple plans, that file more than 1 delinquent plan year per plan number filing at the same time, is $4,000 per plan for large plans and $1,500 for small plans. All Form 5500s must be signed and submitted on the same day to qualify for this bundled penalty.
Form 5500 Delinquent Filing Assistance
Employee Benefits Corporation can assist employers with delinquent Form 5500 preparation as part of our Compliance Services offerings. After signing and submitting the prepared Form 5500s, employers pay the DFVCP penalties directly to the DOL online as part of the process. Employers may need to consult with a tax advisor to determine the best plan of action for this circumstance. Please contact sales@ebcflex.com for more information.