You may be asking “55 what”? Five years ago, when I was in private practice, I was blissfully unaware of Form 5500. After all, that was for the benefits attorneys. Fast forward to present and here I am writing an article on the very topic! So why would a non-benefit individual need to worry themselves with such a (seemingly) complicated subject? Well, if you are responsible for benefits in your organization, and you have more than 100 participants on those benefit plans, you have a legal obligation to take care of this reporting. Let’s break it down further so you need not immerse yourself in benefits for five long years, like I did.
At a basic level, it is a government-created form, which is filed annually with the federal Employee Benefits Security Administration for certain plans. The form was created based on a reporting obligation under the Employee Retirement Income Security Act (ERISA). The intent behind the regulation was to ensure employees, beneficiaries, and the government had access to information about the plan to ensure the rights of the participants were being protected and the plan was being managed within certain standards.
The form applies to both employer-sponsored retirement plans and health and welfare plans. The following questions help determine when the form must be filed:
This is a very simplistic summary to determine when a form is required to be filed. However, additional issues arise regarding how many ERISA plans there are based on whether or not a wrap plan exists. That is beyond the scope of this article. Furthermore, analysis is anticipated for nearly every question above, which is not covered here. But to learn more, join us for our webinar on May 24, 2017.
The form is required to be filed within seven months of the end of the plan year. So if you have a calendar year plan (1/1 – 12/31), the form would be due on or before July 31, 2017. In addition to the form, employers must also provide a Summary Annual Report (SAR), which is a verbal summary to the participants regarding the filing. The SAR is due within 9 months of the end of the plan year (or using the example above, on or before September 31, 2017).
There is the 5500 form itself and then several schedules. Retirement plans have four schedules. There are also six schedules for various pieces of financial information. Not every plan files each of these schedules. For health and welfare plans, the following schedules are typically used:
Schedule A, possibly Schedule C, and either Schedule H (large plan) or Schedule I (small plan)
Schedule C and either Schedule H (large plan) or Schedule I (small plan)
Either no schedules or Schedule C
The most common schedules used for health and welfare plans are Schedule A, which is the insurance information or Schedule C, which is the third party administrator information. Instructions on the various schedules and filing requirements can be found here.
Penalties are very stiff if a failure to file is ever uncovered by the Department of Labor (DOL). To enforce this requirement, DOL audits employer benefit plans. Penalties can be up to $1,100 per day for late filing, which must be paid by the employer rather than the plan assets. There is also the possibility of criminal penalties for intentional failures. If you voluntarily self-correct before being subject to a DOL audit, there are reduced penalties (presently capped at $750/year for small employers and $2,000/year for large employers).
Rebecca advises employers on leave policies, accommodations, discrimination and early intervention with workers’ compensation claims. While in private practice, she focused on defending workers’ compensation claims and handling Medicare-related issues arising from those claims. Rebecca received her
Rebecca advises employers on leave policies, accommodations, discrimination and early intervention with workers’ compensation claims. While in private practice, she focused on defending workers’ compensation claims and handling Medicare-related issues arising from those claims. Rebecca received her Bachelor of Business Administration degree with a major in human resource management from the University of Wisconsin-Eau Claire and received her law degree from Marquette University Law School.
On May 11, 2014, the governor of Minnesota signed the Women’s Economic Security Act (WESA), a bill that will require Minnesota employers to make dramatic changes to their employment policies and practices.
While WESA directly impacts employers who conduct business in Minnesota, the changes follow plans by federal and local governments to expand legal protections for women and other employees. For this reason, employers in other jurisdictions should pay close attention to these national and state law trends.
“The only thing that is constant is change.”
Turns out that dusty old Greek philosophers occasionally say profound things (Heraclitus also said that a man’s character is his destiny). And since the Greeks are considered the fathers of democracy and were responsible for no small number of laws themselves, it seems an appropriate departure point to talk about the constantly changing landscape of employment laws.
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