Form 5500 Annual Return/Report is due the last day of the seventh month after the plan year ends (July 31 for a calendar year plan), with an additional 2 ½ months extension if Form 5558 Application for Extension of Time to File has been submitted (October 15th with an extension).
Slavic401k will file the Form 5558 Application for Extension of Time to File on your behalf if an extension is needed.
A plan with fewer than 100 participants (on the first day of the plan year) that meets all of the eligibility conditions is considered a “small plan” filer and can file Form 5500-SF. A plan with more than 100 participants (on the first day of the plan year) is considered a “large plan” filer and must file Form 5500 and complete all applicable schedules and attachments.
NOTE: Pooled Employer Plans (PEPs) can only file the Form 5500 and are restricted from filing Form 5500-SF.
A plan participant is any employee eligible to participate in an employer’s retirement plan when certain eligibility conditions stated in the plan document are met. A participant is also an employee or former employee (terminated employee) of an employer who is or may become eligible to receive a benefit from an employee benefit plan. The number of participants at the beginning of the year determines which 5500 form must be filed.
For those plans which do not fall under the notable exception (80/120 rule) and are considered a “large plan filer,” Scheduled H must be completed in addition to any other applicable schedules and attachments. Slavic401k will prepare a complete signature-ready Form 5500 for you to file with the EBSA.
An independent audit must be attached to the completed Form 5500 before it is electronically filed. The plan sponsor is responsible for engaging the author to prepare the independent audit.
To avoid penalties for failing to complete the Form 5500 or ramifications of filing late, plan sponsors should take the time to understand the requirements for a retirement plan audit well in advance of the filing deadline.
An audit is required for large plan filers and may be deferred but not eliminated for plan years of seven (7) months or less (due to initial year of the plan, merger, or change of plan year). The short plan year does not eliminate the audit requirement; it only defers the audit requirement until the following year.
In the year in which the audit will be required, the audit will cover the full plan year and the short period. Additionally, Form 5500 must still be filed for the short plan year.
The IRS will receive your filing, but the DOL will send a Notice of Rejection (NOR), usually within a few weeks of submission. This notice informs the plan sponsor that the submission is “delinquent” and that the DOL will issue penalties if it is not corrected timely. The plan sponsor has 30 days from the date of the letter to respond. The plan sponsor can respond to the NOR, explain the circumstances of what is going on, and request an extension. Only during the NOR process can you request an extension and have a chance of avoiding a penalty.
Please note Schedule H, line 3 specifically asks for information regarding the plan’s independent auditor’s report. If you do not submit the required independent auditor’s report, these questions must still be answered correctly. If you have to file Form 5500 without the required independent auditor’s report, correct that error as soon as possible.
Failure to file timely can result in significant DOL and IRS fees and penalties.
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