(b)lines Ask the Experts – Why Some 403(b)s May Delay Form 5500 Filing

“When I questioned this, I was told that ‘everybody does it.’ That doesn’t make much sense to me from a best practices perspective. Why does ‘everyone’ delay their filings in this fashion, and do the Experts have any thoughts as to best practice?”                                                       

Stacey Bradford, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer: 

Well, “everybody” might be a stretch, but indeed many retirement plan sponsors, including 403(b) plan sponsors, do file an extension of time to file their Form 5500s (note that the extension requires the completion of Form 5558). The primary reason for this is twofold:

1)      Most plans (plans with less than 100 participants are a notable exception) must complete a financial audit, and audited financial statements take a lot of time and effort to produce (particularly for 403(b) plans, where assets are often held in individual contracts, as opposed to a trust); and

2)      For calendar year filings (and most plans have a calendar plan year), the regular deadline (July 31) comes during the summer, when, for many entities in  general, and universities in particular, there are less resources on hand to finalize a filing due to summer vacations.

As for best practice, obviously waiting until the last possible day (October 16, 2017, for 2016 calendar year filings, since October 15 falls on a Sunday this year) can be problematic, since, if any last-minute issues are discovered, there is no time to resolve them.  Also, a data traffic jam on the Department of Labor’s (DOL)’s electronic filing web site (EFAST) could prevent a timely filing. Thus, plan sponsors should set a goal of filing their 5500s (and Form 8955-SSAs) well in advance of the extended deadline. In fact, an increasing number of plan sponsors are setting a goal of filing prior to July 31 for calendar year plans, so that an extension would not be required (though such sponsors generally file an extension as well, in the event of unexpected delays).

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.