*Please note that dependents are not considered participants for determining plan size.

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1 Form 5500 Q&A What is the Form 5500 and where does this requirement come from? Under Title I and Title IV of ERISA and under the Internal Revenue Code, pension and welfare benefit plans generally are required to file an annual return or report regarding their financial condition, investments, and operations. The Department of Labor, Internal Revenue Service, and the Pension Benefit Guaranty Corporation jointly developed the Form 5500 series so employee benefit plans could use this form to satisfy annual reporting requirements. What plans must file a Form 5500? The Form 5500 is required for ERISA welfare benefit plans. Common ERISA welfare benefits include: Health insurance and self funded health benefits Dental insurance and self funded dental benefits Vision insurance and self funded vision benefits Health FSAs HRAs Wellness Programs providing significant medical benefits Many EAPs Long term disability coverage Accident, death, and dismemberment insurance Life insurance Severance benefits How are plans categorized for the purpose of Form 5500? The Form 5500 filing requirements vary according to the type of plan. There are generally three types: 1. Small plans (generally plans with fewer than 100 participants* as of the beginning of the plan year) 2. Large plans (generally plans with more than 100 participants* as of the beginning of the plan year) 3. Direct filing entities (DFEs are trusts, accounts, and other investment or insurance arrangements that plans participate in and that are required to or allowed to file the Form 5500 directly with EBSA) *Please note that dependents are not considered participants for determining plan size. 1

2 What is an unfunded plan vs. a funded plan? An unfunded plan is one that pays benefits as needed solely from the general assets of the employer sponsoring the plan. A plan becomes a funded plan when it uses plan assets to pay benefits in whole or in part. A plan funded by participant contributions under a cafeteria plan may be deemed to be unfunded, for purposes of this Form 5500 exemption (under DOL Technical Release 92 01). What Forms and Attachments must be filed? Large Welfare Plans must file: Form 5500 Schedule A Insurance Information (only if plan has insurance contracts for benefits or investments stop loss contracts may require Schedule A if the stop loss contract is issued to the plan instead of the employer, if payments under the policy are made to the plan instead of the employer, or if stop loss premiums are not paid exclusively out of employer assets) Schedule C Service Provider Information (only if service provider was paid $5,000 or more or an accountant or enrolled actuary was terminated) Others less common filings include: Schedule D DFE/Participating Plan Information Part I (only if a plan participates in a master trust investment account (MTIA), common/collective trust (CCT), pooled separate account (PSA), or investment entities (103 12IE) Schedule G Financial Transaction Schedules (only if Schedule H, lines 4b, 4c, or 4d are required to be marked yes. ) Schedule H Large Plan and DFE Financial Information (only if plan is NOT unfunded, fully insured, or a combination unfunded/fully insured) Small Funded Welfare Plans must file: Form 5500 Schedule A Insurance Information (only if plan has insurance contracts for benefits or investments stop loss contracts may require Schedule A if the stop loss contract is issued to the plan instead of the employer, if payments under the policy are made to the plan instead of the employer, or if stop loss premiums are not paid exclusively out of employer assets) Schedule I Small Plan financial Information What is an insured plan? For a plan to be considered insured the following must be met: Benefits must be paid exclusively through insurance policies issued by qualified insurance companies or similar organizations or through qualified health maintenance organizations; 2

3 Premiums must be paid directly by the employer from general assets or partly from participant contributions, provided that the participant contributions are forwarded to the insurer or HMO as soon as possible but no later than three months after being withheld or contributed; and Insurance refunds to which contributing participants are entitled must be refunded within three months, and participants must be informed, when they enter the plan, about the plan s provisions for allocating refunds. What plans are exempt from 5500 filing? Small unfunded, small insured, and small combination unfunded/insured welfare plans are completely exempt from the Form 5500 requirement. Other plans that may be exempt include the following: Governmental plans A church plan under ERISA section 3(33). A welfare benefit plan maintained outside the United States primarily for persons substantially all of whom are nonresident aliens. An unfunded or insured welfare plan for a select group of management or highly compensated employees which meets the requirements of 29 CFR An employee benefit plan maintained only to comply with workers compensation, unemployment compensation, or disability insurance laws. A welfare benefit plan that participates in a group insurance arrangement that files a Form 5500 on behalf of the welfare benefit plan as specified in 29 CFR See 29 CFR An apprenticeship or training plan meeting all of the conditions specified in 29 CFR An unfunded dues financed welfare benefit plan exempted by 29 CFR A welfare benefit plan solely for (1) an individual or an individual and his or her spouse, who wholly owns a trade or business, whether incorporated or unincorporated, or (2) partners or the partners and the partners spouses in a partnership. See 29 CFR (b). Do I have one plan or multiple plans? Form 5500 instructions explain that one Form 5500 is required for each plan. Discretion is left to the employer to designate what constitutes a plan and multiple benefits may be bundled into one plan as long as plan documents (insurance contracts, SPDs, wrap documents) reflect this intent. There are no hard and fast rules for determining how many plans an employer sponsors. As a consequence, the plan sponsor is generally free to determine the number of plans it has for ERISA compliance purposes. Determining and declaring the number of plans is therefore part of the plan design process. As part of the plan design and documentation process, the plan sponsor may choose to establish any of the following: A single bundled plan through which all fringe benefits are provided, 3

4 Multiple plans with different groups of benefits bundled in different configurations ( e.g., health, dental, vision, and employee assistance under one plan; short term disability and long term disability under another). One plan for each type of benefit plan (e.g., medical, dental, vision, life, long term disability, shortterm disability, and employee assistance each have a separate plan). Absent any intent to bundle, the default rules provide that there should be one plan and therefore one Form 5500 for each insurance contract or for each type of benefit. What is the effect of bundling my plans? The number of plans can impact ERISA compliance. Each welfare benefit plan must be maintained pursuant to a written instrument. If more than one benefit program is included under a single welfare benefit plan (e.g., health, vision, dental and employee assistance plan benefits), then a wrap around welfare benefit plan document should be prepared to evidence the bundled approach. In that case, there will be a single plan document that explains, for ERISA purposes, that there is only one welfare benefit plan. In this case, only one 5500 would need to be filed. Note that if you choose to bundle all of your benefits into one plan, and just one of the bundled benefits has over 100 participants, you will be required to file a Schedule A for each insured benefit, even if that individual benefit program has fewer than 100 participants as of the beginning of the plan year. This can create problems because it is not uncommon for insurance carriers to provide Schedule A information only when 100 or more participants are covered under the policy issued. What is a plan name and where is it found? The plan name is the formal name assigned to the plan at creation. The formal name of the plan should appear in the plan s SPD and/or plan document. Each plan should have a distinctive plan name and this name should remain consistent from year to year for 5500 reporting absent the termination of one plan or creation of a new plan. Examples of a plan name include: ABC Company s Group Benefit Plan, ABC Company s Group Medical Plan, and ABC Company s Group Dental Plan. What is a plan number and where is it found? The plan number is a number that the employer or plan administrator assigns to each plan as required under ERISA for reporting purposes. Welfare plans of an employer are required to be numbered consecutively, starting with 501. Once a plan number is used, it should always be used in connection with that plan and should not be used for any other plan even if the first plan is later terminated. Together, the plan number and the plan sponsor s EIN form a unique 12 digit number to identify the plan. The plan number should appear in the plan s summary plan description (SPD) and/or plan document. What is the difference between a plan year, a contract year, and a fiscal year? 4

5 Plan Year The plan year is the period of time (no greater than 1 year) that the plan administrator assigns to the plan. This can be a calendar year, a contract year, a fiscal year, or any other period chosen by the plan. Whatever plan year chosen must be consistent on the Form 5500 and all Schedules. Contract Year The contract year refers to the period (usually twelve months) that is agreed to by the insurance carrier or TPA and the employer/plan administrator. Fiscal Year A fiscal year, or financial year, can be any 12 month period without regard to the calendar year, at the end of which a firm, government, etc., determines its financial condition. When are Form 5500s due? The Form 5500 generally must be filed by the last day of the seventh month after the close of the plan year (including short plan years). A 2 1/2 month extension is available to the plan administrator by filing the Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns). This Form 5558 must be filed with the IRS not with the DOL. How are Form 5500s filed? The Form 5500 is filed with the DOL, not with the IRS. For plan years beginning on or after January 1, 2009, the DOL has issued regulations requiring electronic filing of the Form 5500 via the Internet. Filers should consult the EFAST website ( for information on electronic filing. What are the penalties for not filing? Under ERISA, penalties can be imposed for any refusal or failure to file a required Form Penalties apply not just for late or unfiled Form 5500s but also for incomplete or otherwise deficient Form 5500s. The penalties for noncompliance can be heavy: Under ERISA 502, the DOL may assess a civil penalty against a plan administrator of up to $1,100 per day starting from the date of the administrator s failure or refusal to file the Form How do I correct late or unfiled Form 5500s? The DOL s Delinquent Filer Voluntary Compliance (DFVC) Program provides reduced civil penalties to plan administrators that have failed to file Form 5500s or have filed them late. Under the DFVC Program, plan administrators may correct late or unfiled Form 5500s by submitting a completed Form 5500 for the plan year (or plan years) in question and by paying the penalty amounts specified under the DFVC Program. The DFVC program is available only to plans not yet notified by the DOL of form 5500 problems. In the case of a large plan (a plan with 100 or more participants at the beginning of the plan year) the applicable penalty amount is $10 per day for each day the Form 5500 is filed after the date on which the Form 5500 was due (without regard to any extensions that might have applied), not to exceed the greater of $2,000 per Form 5500 or, in the case of a DFVC submission relating to more than one delinquent Form 5500 filing for the plan, $4,000 per plan. 5