Form 5500 is the annual return that most employee benefit plans file with the federal government. It is how the Department of Labor, the IRS and the PBGC learn what a plan owns, what it paid and who services it. For a plan large enough to require an audit, the auditor's report travels with the filing, so the audit timeline is set by the Form 5500 due date.
This guide is about the filing: the forms, the schedules, the dates and the penalties. For the question of which plans need an audit and how participants are counted, see 401(k) audit requirements. For the audit steps themselves, see the ERISA audit glossary entries and the Form 5500 definition.
Who files Form 5500?
The employer or plan administrator of a pension or welfare plan covered by ERISA files an annual return and report. Pension plans include 401(k) and defined benefit plans. Welfare plans include health and other benefit plans that meet the filing rules.
Which version applies depends on the plan:
| Form | Used for |
|---|---|
| Form 5500 | The full annual return, required for large plans and available to any plan |
| Form 5500-SF | The short form for plans with fewer than 100 participants that meet the eligibility conditions in the form's instructions |
| Form 5500-EZ | One-participant plans and certain foreign plans. Since January 1, 2021, the 5500-SF can no longer be used for these plans |
Form 5500 and Form 5500-SF must be filed electronically through the government's EFAST2 system. Form 5500-EZ may be filed on paper with the IRS unless the filer is subject to IRS electronic filing rules or chooses to file electronically.
Small plan or large plan?
The size category decides the schedules and the audit requirement. In general, a plan with fewer than 100 participants at the beginning of the plan year files as a small plan, and one with 100 or more files as a large plan. The Form 5500 instructions include a transition rule, commonly called the 80-120 rule, for plans near the line, and they define who counts as a participant. Those definitions have changed, so use the instructions for the plan year being filed and the explanation in 401(k) audit requirements.
A large-plan filer must include an audit by an independent qualified public accountant unless an exception applies. A small plan can waive the audit if it meets the conditions of the Department of Labor's small plan waiver rule in 29 CFR 2520.104-46. For pension plans, the waiver depends on the plan's qualifying plan assets (at least 95 percent) or on a fidelity bond covering the non-qualifying assets, along with required disclosures in the summary annual report. The waiver removes the audit, not the obligation to file Form 5500.
Schedules and attachments
The schedules a plan files depend on its type, size and investments. The common ones are:
- Schedule A: insurance contract information.
- Schedule C: service provider compensation.
- Schedule D: participation in direct filing entities such as master trusts.
- Schedule G: financial transaction schedules, including loans and leases in default and non-exempt transactions.
- Schedule H: financial information for large plans, including the plan's assets, liabilities, income and expenses.
- Schedule I: financial information for small plans.
- Schedule R: retirement plan information, such as distributions and funding notices.
- Schedules MB and SB: actuarial information for defined benefit plans.
Large plans attach the independent auditor's report and the audited financial statements, and the Schedule H amounts should agree to those financial statements. The firm's Form 5500 financial statement reconciliation is built to document that tie-out. Differences between the plan's financial statements and Schedule H often come from accounting basis differences, such as accrued items or deemed distributions, and they must be explained and not left as unexplained variances.
When is Form 5500 due?
The return is due on the last day of the seventh month after the plan year ends. For a calendar-year plan, that is July 31.
An extension is available with Form 5558, Application for Extension of Time To File Certain Employee Plan Returns. Filed on or before the original due date, it extends the deadline by up to two and a half months, which moves a calendar-year plan's deadline to October 15. Form 5558 can be filed electronically through EFAST2 or on paper, and a separate Form 5558 is needed for each 5500-series extension.
Employee benefit plan audits often fall behind because the audit must be complete before the filing can be. Engage the auditor and send the first information request well before year-end, and agree dates for the plan's financial statements, the service organization reports and the participant data. See service organizations and SOC 1 reports.
What are the penalties for filing late?
- IRS: $250 per day for failure to file the Form 5500 series, capped at $150,000.
- DOL: the Department of Labor can assess civil penalties for a failure or refusal to file a complete and timely annual report under ERISA section 502(c)(2). The maximum amount is adjusted annually for inflation.
The DOL operates the Delinquent Filer Voluntary Compliance Program, which allows late filers to pay reduced penalties if they come forward before the DOL notifies them of a problem. The terms are set by the DOL, so read the current program notice. The IRS can abate penalties where the filer shows reasonable cause.
Worked deadline and penalty example
Illustrative. A calendar-year 401(k) plan with 140 participants at the beginning of the year is a large-plan filer, so it needs an audit.
- Plan year end: December 31.
- Original due date: July 31 of the next year (the last day of the seventh month).
- With a timely Form 5558: October 15.
- If the plan misses October 15 and files on January 13 of the following year, it is 90 days late. IRS exposure is 90 x $250 = $22,500, below the $150,000 cap. The cap would apply at 600 days late, since $150,000 divided by $250 per day is 600.
The sponsor would also consider the DOL program before the DOL contacts it. The figures in the example show only how the IRS rule works, and the actual assessment depends on the facts and on abatement relief.
Common mistakes
- Filing on 5500-SF when the plan has assets, such as non-qualifying investments, that the form's instructions do not allow on that form.
- Missing the audit because the participant count was wrong. See how participants are counted.
- Filing without the auditor's report when the plan is a large-plan filer, or submitting a financial statement that disagrees with Schedule H.
- Filing the extension request after the original due date.
- Forgetting the final Form 5500 for a plan that terminated, which remains required until all assets are distributed.
- Treating a limited-scope audit as an audit that excuses missing procedures. See ERISA limited-scope audit.
Frequently asked questions
When is Form 5500 due?
The last day of the seventh month after the plan year ends: July 31 for a calendar-year plan. A timely Form 5558 extends it by up to two and a half months.
Who needs to file Form 5500-SF?
Plans with fewer than 100 participants that meet the form's eligibility conditions. One-participant and foreign plans file Form 5500-EZ.
Does a small plan need an audit?
Not if it qualifies for the small plan waiver under 29 CFR 2520.104-46. A large-plan filer needs an audit unless an exception applies.
What is EFAST2?
The electronic filing system for Form 5500 and Form 5500-SF, run by the Department of Labor.
What is the penalty for not filing Form 5500?
The IRS penalty is $250 per day up to $150,000. The DOL can assess separate civil penalties.
Sources
- DOL EBSA, Form 5500 Series, dol.gov
- IRS, Form 5500 Corner, irs.gov/retirement-plans/form-5500-corner
- IRS, Instructions for Form 5558, irs.gov
- 29 CFR 2520.104-46, Waiver of examination and report of an independent qualified public accountant for employee welfare and pension benefit plans covering fewer than 100 participants, ecfr.gov
- ERISA sections 103(a)(3) and 502(c)(2)
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