Form 5500: the annual return that is also a public document

Form 5500 is the annual return and report filed for most employee benefit plans in the United States — retirement plans and, above a size threshold, welfare plans such as health, dental and life cover. It is filed electronically through the EFAST2 system, and it is filed by the plan administrator rather than by the payroll department.

Two features distinguish it from other annual filings. First, it is a disclosure document as much as a return: the completed filing is published and searchable, so anyone can read the plan’s financial position, its service providers and its fees. Second, the penalties for late or missing filings are assessed per day, which is why a forgotten plan can accumulate a striking liability before anyone notices.

Which Form 5500 version applies

• The full Form 5500, with schedules, for larger plans — including an independent audit requirement above the participant threshold.
• A short form for smaller plans meeting the eligibility conditions, which is materially less work.
• A separate form for one-participant plans, filed with the tax authority rather than through the main system, once the plan crosses the asset threshold.
• Schedules covering insurance information, service provider fees, financial statements and actuarial information, depending on the plan.
• An extension form, filed before the original deadline, which is a common and unremarkable step rather than a signal of trouble.

Welfare plans are the ones employers forget

Retirement plans have administrators who file as a matter of routine. Health and welfare plans do not always, and employers above the participant threshold are frequently unaware that a filing is due for them at all — particularly where the plan is funded through a trust or where several benefits sit under one wrap document. This is the single most common source of unfiled 5500s, and the delinquent filer programme exists precisely because it is so common. Where filings have been missed, that programme is normally far cheaper than waiting to be found.

Assume your filing will be read. Recruiters, competitors and litigators use the public database routinely, and the schedules disclose service provider compensation and plan financials in detail. That is not a reason to file differently; it is a reason to know what your own filing says before somebody else quotes it back to you.

Looking one up

The same publication makes the database useful in the other direction. A prospective service provider’s other clients, the fees a comparable employer pays, or the size of a competitor’s plan are all visible, and searching by plan sponsor takes a minute. Employers negotiating with a recordkeeper or an insurer are in a much better position having looked at a few comparable filings first.

Keeping the year’s working file

What makes the filing straightforward is the file behind it: participant counts at the required measurement dates, the trustee and custodian statements, the service provider fee disclosures, and the prior year’s filing to compare against. Ettex Sheets holds the participant counts and reconciliations, Ettex Records keeps the filed returns, schedules and the audit report per plan and per year, and the eligibility documentation that feeds participant counts sits with the employee onboarding checklist.

To be clear: this is records and spreadsheets, not benefits administration software, and none of it is legal or actuarial advice. Filing goes through the electronic system, plan audits are performed by independent accountants, and whether a particular plan must file is a question for your plan adviser.