July is a big month for Form 5500 filing. An employer that has health and welfare benefit plans that have 100 or more participants on the 1st day of the plan year will have a filing deadline seven months from the end of the plan year, which is July 31st for calendar year plans.
The Form 5500 is an ERISA requirement for all health and welfare plans subject to ERISA. Employers that sponsor insured plans and self-insured plans (such as the Health Care FSA and Health Reimbursement Arrangement [HRA]) will have a filing requirement only if they are large plans with 100 or more participants in the plan as of the first date of the plan year. Other component benefit plans which may require filing include plans providing major medical, dental, long-term disability, AD&D, or group term life insurance.
Entities like church controlled groups and governmental entities (i.e. state, city, town, village, public school districts, etc.) are not subject to ERISA and will not be required to file a Form 5500 even if the plan participation exceeds 100 participants.
So what happens if the employer cannot file on time?
In the event that an employer cannot complete and submit the Form 5500 electronically by the deadline for their plan year, a one-time 2.5 month extension can be requested by submitting IRS Form 5558 by the original filing deadline (for 2017 calendar year plans-extension filed by 7/31/18).
If the employer fails to file the extension by the filing deadline, there is a penalty of $50 per day for late returns without a cap for late filings, unless the employer uses the Delinquent Filer Voluntary Compliance Program (DFVC). The penalty is assessed per plan number for each plan year.
Form 5558 Completion
A copy of Form 5558 can be obtained on the IRS website http://www.irs.gov/pub/irs-pdf/f5558.pdf
To complete the Form 5558, an employer will fill in the Employer name, address, EIN, Plan Name, Plan Number and Plan ending date, and the requested extension deadline portions of the form (see sample below). This information can generally be found in the Summary Plan Description. The extension request is for a maximum of 2.5 months and is granted automatically as long as the request is postmarked by the original filing deadline. If the employer is requesting an extension for the Form 5500 series, an employer signature is not required.
Although the completed Form 5500 must be filed electronically, the Form 5558 for the extension must be submitted via U.S. Mail or Private Delivery Service (DHL Express, Federal Express, and UPS). The mailing address for all extension requests regardless of state of organization or filing deadline is: Department of the Treasury - Internal Revenue Service Center- Ogden, UT 84201-0045.
The Bottom Line
Some employers may not be able to meet the initial Form 5500 deadline. This may be because they were waiting for data to come from an insurance carrier, the person that needs to sign the Form 5500 is not available to sign the form, or they recently realized that they needed to file a Form 5500 and the preparer does not have adequate time to complete the return prior to the deadline. An extension can be filed on or before the original deadline, which will give the employer an extra 2.5 months to file the Form 5500.
Important: Failure to file the Form 5500 by the extension deadline will result in the daily penalty assessment back to the original Form 5500 deadline.
Form 5500 Preparation Services. We are able to assist employer with health and welfare plan Form 5500 preparation. This will include Health FSA, HRA and other types of Form 5500s (i.e. insured plans, self-funded plans, wrap plans, etc.) upon request from current clients and for those that would like to contract for Compliance Services. Please contact email@example.com for more information.