The Basics About Form 5500s

What the DOL and IRS want to know about your retirement plan

By Lee Barney | January 20, 2017
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Every retirement plan governed by the Employee Retirement Income Security Act (ERISA), regardless of size, needs to file a Form 5500 with the Internal Revenue Service (IRS), says Richard Rausser, senior vice president of client services at Pentegra Retirement Services in White Plains, New York.

Although plans only need to file one document, the IRS shares these forms with the Department of Labor (DOL), he says.

The form is due seven months after the end of the plan year, says Jim Vanburen, a director in the human capital services practice at Grant Thornton LLP in Albany, New York. Thus, if a plan’s calendar year ends on December 31, it is due July 31, Vanburen says. Should a plan need additional time to complete the form, they can file a Form 5558 for a 2-1/2-month extension, as long as the form for the extension is filed before the original Form 5500 deadline, he says.

It is important for retirement plan advisers and sponsors to realize that the purpose of these forms is merely to gather basic information about a plan, as opposed to being a tax return, notes Adam Bergman, a senior tax attorney with IRA Financial Group in New York. That is, undoubtedly, why the IRS audited only 8,706, or less than 1%, of the 908,000 Form 5500s that it processed in 2014, he says.

A plan’s recordkeeper or third-party administrator typically fill out the forms, according to Vanburen and  Mark Klein, CEO of PCS, a recordkeeper in Philadelphia. However, “the form is signed by the plan administrator under penalty of perjury, so sponsors and their advisers can and should verify the accuracy of the form before it is filed,” Klein says. “To verify the information and confirm accuracy, sponsors and their advisers should review the completed form against the plan’s trust report, employer census information, plan document and other plan information.”

Michael Savage, retirement services compliance manager for Paychex in Rochester, New York, says that errors that are typically found on Form 5500 “include participant counts, beginning asset balance, employer tax ID numbers, financial reconciliations with prior plan years and missing service providers on Schedule C.”

NEXT: Information gathered on the form