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Retirement Planning Information

Form 5500 Filing Tips For Pension Plans, Welfare Plans and Direct Filing Entities

The Department of Labor (DOL), the Pension Benefit Guaranty Corporation (PBGC) and the Internal Revenue Service (IRS) have compiled the following practical, common sense tips for some of the most frequently occurring Form 5500 filing problems. We hope these tips will reduce the number of basic filing errors we encounter when processing the Form 5500 and Form 5500-EZ returns, and also help you avoid getting EFAST correspondence regarding these basic mistakes. You can get more information in the DOL’s Trouble Shooter’s Guide to Filing the ERISA Annual Report (Form 5500), which is available on the DOL Internet site at www.dol.gov/ebsa. Also, filers with questions can call the EFAST Help Line at 1.866.463.3278.

Important Reminder For Fringe Benefit Plans

The Internal Revenue Service reminds employers that they no longer have to file an annual Form 5500 and Schedule F for so-called “pure fringe benefit plans.”

Employers who in the past filed Form 5500 and the Schedule F (Fringe Benefit Plan Annual Information Return), solely to meet the reporting requirements of Internal Revenue Code section 6039D ("fringe benefit plans"), should file neither Form 5500 nor Schedule F. In fact, the Schedule F has been eliminated and the Form 5500 has been modified so fringe benefit plan information cannot be reported.

Fringe benefit plans are often associated with ERISA group health plans and other welfare benefit plans. The IRS announcement regarding fringe benefit plans does not cover these associated welfare plans. But, in many cases, a Form 5500 was not required for the welfare plan because it was exempt from filing a Form 5500 report under Department of Labor regulations. For example, fully insured or unfunded welfare plans covering fewer than 100 participants at the beginning of the plan year are eligible for a filing exemption. Unless exempt, however, ERISA welfare plans must still file in accordance with the Form 5500 instructions on welfare plan filing requirements.

See IRS News Release No. IR 2003-89 and the Form 5500 instructions for more information.


The Form 5500 Must Be Properly Signed And Dated

Failing to sign the form is the number one reason that filers receive correspondence from the government regarding their Form 5500 or Form 5500-EZ. Make sure that you have the proper signatures and dates on the Form 5500, Form 5500-EZ, and any attached schedules that require a signature (Schedules B, P and SSA).

The type of plan or DFE filing the Form 5500 determines who is required to sign the form. Please consult Section 4 of the Instructions for Form 5500, under the heading "How to File", for information on who is required to sign your return/report.

Remember, if you choose to file electronically, the plan must keep in its records an original copy of the Form 5500 filing with all required signatures.


The Form 5550 Must Have The Proper EIN And Plan Number (PN)

It is critical that the Employer Identification Number (EIN) used to identify the “plan sponsor” be the same year to year when completing line 2b of the Form 5500 or Form 5500-EZ. Switching EINs without reporting the change on line 4 of the Form 5500 or Form 5500-EZ will disrupt proper processing of your form and cause correspondence with the filer. Also, the same EIN must go on Line D of all the attached schedules (except Schedule P which reports the EIN of the plan’s employee benefit trust(s) or custodial account(s)).

A multiple-employer plan or plan of a controlled group of corporations should select one of the participating employers to list as the plan sponsor and use that employer’s EIN on line 2b. If the plan sponsor is a group of individuals (e.g., a board of trustees of a collectively bargained plan) get a single EIN for the group. In the case of a Form 5500 filed for a Direct Filing Entity (DFE), use the EIN assigned to the CCT, PSA, MTIA, 103-12 IE or GIA.

The three-digit plan number (PN), in conjunction with the EIN, is used as a unique 12-digit number to identify the plan or DFE. Although EINs are obtained from the IRS, the plan sponsor/employer or plan administrator assigns the PN. Also, once a three-digit plan number and your EIN is used for one plan or DFE it cannot be used for any other of your plans or DFEs, even after the plan or DFE terminates.

Plan administrators, plan sponsor/employers and DFE sponsors should assign PNs as follows. Plans providing pension benefits (such as profit-sharing or money purchase plans) should be assigned plan numbers starting with 001 and consecutive numbers should be assigned to other pension plans (e.g., 001, 002, 003, etc.). The sponsor of an MTIA, CCT, PSA or 103-12 IE filing as a DFE should also start with number 001 and consecutive numbers should be assigned to other DFEs of the sponsor. Welfare plans and group insurance arrangements (GIAs) filing as DFEs should be assigned plan numbers starting with 501 and consecutive numbers should be assigned to other welfare plans and GIAs (e.g., 501, 502, 503, etc.). Do not use 888 or 999 as a PN.

Consult the Form 5500 filing instructions for line 1b and 2b in Section 6, “Line-by Line Instructions”, for additional information on EINs and PNs. The instructions for Line 2b include information on how to obtain EINs from the IRS.


The Form 5500 Filing May Not Be For A Period Greater Than 12 Months

Be certain the time period entered in Part I of the Form 5500 is not greater than twelve months. If the plan year is a calendar year (January 1 through December 31) the spaces provided for dates in Part I may be left blank. If the plan or DFE is not reporting on a calendar year basis, but instead using a fiscal year, then input the twelve-month (or shorter) fiscal year period in the spaces provided. Example: fiscal year beginning 07/01/2002 and ending 06/30/2003.

Make certain that there is no gap between the ending date of your previous year’s Form 5500 and the beginning date of the current year’s form. Take special care if filing a Form 5500 for a short plan year (a plan or DFE year of less than twelve months), for instance, if the plan or DFE changes from a calendar year to a non-calendar fiscal year. In that case, the beginning date entered on the “short plan year” Form 5500 should be one day after the ending date of the previous year's Form 5500 and the ending date should be one day before the beginning date entered on the next year’s Form 5500. In addition, Line B(4) should be checked on the short plan year Form 5500. Please refer to the Form 5500 filing instructions, Section 4 ("How to File" and "Change in Plan Year"), for additional information.

The plan year beginning and ending date on all attached Schedules (except Schedule P) must match the plan year beginning and ending dates on Part I of the Form 5500.



Do Not File A Form 5500 As A “Final Return/Report” If The Plan Has Assets, Liabilities Or Participants At The End Of The Plan Year

Even if you consider a plan to have been terminated, a Form 5500 and all necessary schedules are required to be filed until all assets have been distributed to the participants, legally transferred to the control of another plan, or reverted to the employer; and all liabilities for which benefits may be paid under a welfare benefit plan have been satisfied. Except as noted below for certain defined benefit pension plans, a plan should not check the “final return/report” box on Line B(3) of the Form 5500 and report having participants at year-end on Line 7 of the Form 5500 or report having assets and liabilities at the end of the year on the Schedule H or I.

If a trustee is appointed for a terminated defined benefit plan subject to ERISA section 4042, the last year for which a return/report must be filed is the year in which the trustee is appointed. For the final reporting year, check the “final return/report” box on line B(3) of the Form 5500, report the number of participants at year–end on line 7 on the Form 5500, enter Code 1H on line 8a of the Form 5500, and report the value of the assets and liabilities at the end of the year on the Schedule H or I, as applicable.

A welfare plan that does not expect to file a Form 5500 for the next plan year because the plan has become eligible for the Form 5500 filing exemption for small unfunded, insured or combination unfunded and insured welfare plans should not check Line B(3) on the Form 5500 but should enter Code 4R on line 8b.

Please refer to the Form 5500 filing instructions in section 4 under the heading "Final Return/Report" and in section 6 regarding Line B(3) for more information.


Use A Proper Business Code When Completing Line 2d Of The Form 5500

On Form 5500, Line 2d, be certain to enter a valid business code that best describes the nature of the plan sponsor's business.

The only business codes that are valid for use in answering Line 2d are listed in the Form 5500 filing instructions section marked “Codes for Principal Business Activity”. If more than one employer and/or employee organization is involved, the business code for the main business activity of the employers and/or employee organizations should be entered.

Business codes may change from year to year. Therefore, the business code used for your last year’s filing may not be a valid business code for the current year filing. You should select the appropriate business code from the Form 5500 filing instructions section marked “Codes for Principal Business Activity” (e.g., if filing a 2002 Form 5500, the business code you select should be one of the business codes from the 2002 instructions).


Use The Correct Plan Characteristics Codes On Line 8 Of The Form 5500

On Form 5500, Line 8, you must check box A and/or B to indicate if the plan is providing pension benefits and/or welfare benefits.

After indicating which benefits are being provided by checking box A and/or B, you must enter the Plan Characteristics Codes in the space provided beneath boxes A and/or B. These codes describe the type of pension and/or welfare benefits provided and other features of the plan. A list and description of the Plan Characteristics Codes is in Section 6 of the Instructions for Form 5500.

An individual account pension plan like a money purchase plan or profit-sharing plan (including a 401(k) arrangement) should enter on Form 5500 line 8 the appropriate “Defined Contribution Pension Features” and “Other Pension Benefit Features” codes that are listed in the Form 5500 instructions. Individual account plans would not normally enter codes for “Defined Benefit Pension Features,” such as 1A, 1B, or 1C.


Properly Identify The Funding And Benefit Arrangements On Line 9 Of The Form 5500

Indicate all the proper Funding and Benefit Arrangements on Form 5500, Lines 9a and 9b. The “Funding Arrangement” is the method used for the receipt, holding, investment, and transmittal of plan assets prior to the time the plan actually provides benefits. The “Benefit Arrangement” is the method by which the plan provides benefits to participants.

Be careful to indicate all the applicable Funding and Benefit Arrangements. The responses on Lines 9a and 9b are cross-referenced against information on Schedules H, I, and/or A, as appropriate. Be careful to attach the appropriate financial or insurance schedule (H, I, A) that corresponds to the Benefit and Funding Arrangements you indicate. For instance, if "Trust" is indicated as an Arrangement, then a Schedule H or I (as appropriate) should be submitted with the Form 5500. Likewise if you indicate "insurance" as a Funding and/or Benefit Arrangement, a Schedule A should be filed with Form 5500 for any insurance contract with a contract or policy year that ended with or within the plan year.

Please refer to the Form 5500 filing instructions, section 6 "Line-by-Line Instructions", for a description of the Funding and Benefit Arrangements.


File All The Required Schedules And Attachments With Your Form 5500

Make sure you are filing all the required schedules and attachments with your Form 5500. The Form 5500 instructions in Section 5, under the heading "What to File", break down filing requirements based on type of filer (large plan, small plan, pension plan, welfare plan, or DFE), and include a Quick Reference Chart that lists each of the Form 5500 schedules and identifies who has to file them.


The Schedules Attached To Your Filing Must Match What You Report On Line 10 Of The Form 5500

The information you enter in the checklist on line 10 of the Form 5500 must match schedules that are submitted with the Form 5500. If you check a box indicating that a schedule is attached, the schedule must be submitted with your Form 5500.

If you are filing Schedules A, P, or T, take special care to enter the total number of each schedule you are filing in the spaces provided on Line 10.


File The Appropriate Financial Information Schedule (H or I) With Your Form 5500

Make sure you file the proper Financial Information Schedule with your Form 5500. The Schedule H is for “large plan” filers (generally plans with 100 or more participants at the beginning of the plan year) and all DFEs. The Schedule I is for “small plan” filers (generally plans with fewer than 100 participants at the beginning of the plan year).

If you filed as a “small plan” last year and the number of plan participants is fewer than 121 at the beginning of this plan year, you may continue to file Schedule I as a “small plan” under the “80-120 Participant Rule.” This rule allows plans with between 80 and 120 participants at the beginning of the plan year to file the Form 5500 in the same category (“large plan” or “small plan”) as the prior year filing. Please consult Section 5 of the Instructions for Form 5500 under the “What to File” heading for more information on the “80-120 Participant Rule”.

Certain Code section 403(b) retirement arrangements, IRA pension plans, fully insured pension plans, and insured, unfunded, or combination insured/unfunded welfare plans do not have to file Schedule H or I. Please consult Section 5, under the heading "Limited Pension Plan Reporting" and "Welfare Benefit Plan Filing Requirements" in the Instructions for Form 5500, for additional information and eligibility requirements.

If you are filing Schedule H or I, make certain that all required information provided is accurate and complete. Make sure the spaces on the asset/liability and income/expense statements (lines 1 and 2) on the Schedule H and I that require a total from the lines above are completed accurately.

Schedule H:

  • If Schedule H is filed, Part III of the schedule, regarding the independent qualified public accountant's (IQPA) report and opinion, must be completed. The report of the IQPA identified on Line 3 must be attached to the Form 5500 unless Line 3d(1) or 3d(2), (3b(1) or 3b(2) on 2002 and prior year forms) is checked.

  • Plans filing Schedule H must answer all items in Part IV, Lines 4a through 4k and Line 5a. Check either “yes” or “no” as appropriate, and, where applicable, enter the dollar amounts or other information that is required. Not responding or indicating “n/a” to an item may cause the filing to be rejected.

  • MTIAs, 103-12 IEs, and GIAs should leave Schedule H, lines 4a, 4e, 4f, 4g, 4h, 4k, and 5 blank. 103-12 IEs also do not complete 4j.

Schedule I:

  • When filing Schedule I, be certain that the amounts entered on Part I, lines 3a through 3g (Specific Assets of the Plan) are the year-end values for the assets. The purchase price for an asset that was purchased during the plan year is not necessarily the year-end value. Also, if the plan sold an asset reportable on lines 3a through 3g during the plan year, a “0” should be entered on the appropriate line in the amount column if there were no other asset values to report on that line.

  • The amounts entered on Schedule I, Line 3f, "Loans (other than to participants)", should be the value of the loans that are an asset of the plan. Loans are assets to be reported on line 3f if the plan loaned the amounts (other than participant loans) or purchased loans originated by a third party. Do not include amounts the plan borrowed; amounts the plan owes should be reported as a liability on Schedule I, line 1b.

  • Plans completing Schedule I must answer all items in Part II, Lines 4a through 4k and Line 5a. Check either “yes” or “no” as appropriate, and, where applicable, enter the dollar amounts or other information that is required. Not responding or indicating “n/a” to an item may cause the filing to be rejected.


Do Not Submit An Incomplete Form 5500, Or Loose Schedules Or Attachments

The Form 5500 must be submitted in its entirety with all required schedules and attachments (including the report of the independent qualified public accountant, if applicable).

Loose schedules and attachments filed without a completed Form 5500 or amended Form 5500 will not be considered filed or processed. However, government, church or other plans that elect voluntarily to file the Schedule SSA are not required to attach the schedule to a Form 5500 but must check box 1b on the Schedule SSA. See the Schedule SSA instructions for more information.

Hand print and machine print forms generated by EFAST approved software will not be processed if they are printed out blank, or with limited information, and then completed by pen or typewriter. Only official hand print paper forms printed by the IRS are allowed to be completed by pen or typewriter.


Follow The Proper Procedures When Filing An Amended Form 5500

If the amended return/report is filed electronically, submit a completed and dated Form 5500 with electronic signature (check Box B(2) in Part I to indicate it is an amended return/report), and refile all schedules and attachments, including those that are not being amended.

If the amended return/report is submitted in paper form, submit a new completed, signed and dated Form 5500 (check Box B(2) in Part I) and attach only the schedules or attachments that are being changed from the prior filing. Do not attach schedules and attachments that are not being changed. Do not attach schedules where only attachments are being amended. Identify only the schedules that are being amended on line 10 of Form 5500. If only attachments are being amended, do not identify any schedules on line 10 of Form 5500.

If you are submitting a corrected Form 5500 in response to correspondence from EBSA regarding processing of your return/report, do not check Box B(2) on the Form 5500.