Why the 5500 Form is more Important than you Think:
What is a 5500?
The 5500 Form is an annual employee benefit/return report, it can be a complicated, time-consuming and confusing for those unfamiliar with it. Making a mistake on the form, or failing to file on time, can result in massive and costly penalties from both the Department of Labor (DOL) and the Internal Revenue Service (IRS) or even an internal audit. The SECURE Act, passed in December of 2019 increased the IRS penalty beginning in 2020; late filers can expect to pay fines of $250 a day, with a maximum of $150,000 per plan year. In addition to those fees, the DOL has the authority to impose penalties on all plans under Title I of ERISA, for each day the filing is late, a $2,233 penalty per day is imposed. There is no maximum, if this mistake goes unnoticed or unrectified, the cost of accumulated penalties could be catastrophic to a business.
Who is required to file a 5500?
Not all plan sponsors are required to file the 5500, only those employers who sponsor plans with 100 or more participants must file.
When is the filing deadline?
The 5500 is due on the last day of the seventh month from the plan start date. For example, a company with a benefit plan beginning January 1, 2020 is required to submit their 5500 by July 31, 2020.
Can I file an extension?
Yes. Time extensions are permitted on the 5500. The form to file an extension for Form 5500 is Form 5558 and is due on or before the original 5500 due date. This form provides a one-time, 2.5 month extension to the 5500 deadline.
Due to the ongoing COVID – 19 pandemic, in April of 2020, the IRS issued an extension for 5500 employee benefit plans. Plans with filings due between April 1, 2020 and July 15, 2020 were all extended for a July 15 deadline this year.
What happens if we missed the filing deadlines?
First, don’t panic, mistakes happen. If you’ve missed a deadline, or made a mistake on a past filing, we can correct it for you. Contact us as soon as possible to mitigate any further possible penalties.
At Benchmark Planning Group, we’re experts at what we do. We keep close track of all filing deadlines; our clients never have to worry about filing late or incurring costly penalties. Our experts take extra care to review all filings on behalf of our clients, ensuring that they are submitted error-free. In fact, when it comes to Form 5500, Benchmark does almost all of the work, our clients are worry-free in our hands.