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Revised Model Summary Annual Report

Throughout the year, welfare benefit plans and pension benefit plans start the process of preparing their annual Form 5500 filings at the end of their plan year.

These annual filings are summarized by the Summary Annual Report (SAR) that must be distributed to all plan participants within nine months after the close of the plan year, which is two months after the Form 5500 is due. The Department of Labor’s Employee Benefits Security Administration (EBSA) recently released revised model SAR documents that can be used by plan sponsors or administrators.

Employee welfare benefit plans are established to provide medical, sickness, accident, disability, death, unemployment, vacation, and other benefits to employees or former employees and their dependents and beneficiaries. These benefits and other pertinent information regarding the plan are then reported in the annual Form 5500 filing. Plans with more than 100 participants on the first day of the plan year must file Form 5500 with the Department of Labor (DOL) each year whether funded or unfunded.

Once the Form 5500 is filed, plan administrators also need to provide a summary of information to participants and beneficiaries of the plan. This summary is known as the Summary Annual Report (SAR). The SAR should be distributed to all participants of the plan during the year for which the plan information is being reported. It is more beneficial for plan administrators to distribute the most recently revised SAR to plan participants to ensure ERISA compliance.

Though the revised versions have minor changes that set them apart from the previous model SAR language, these updated changes are things such as the address where plan participants can request a full copy of a Form 5500. In general, The SAR must include a basic financial statement which states plan expenses, the value of the plan’s assets, amount of plan contributions and a section outlining a participant’s rights to additional information. Typically, it is a one-page document. The DOL states that the SAR must be distributed within nine months after the close of the plan year, so if you have a calendar plan year-end (December 31st), the Form 5500 with no extensions is due July 31st and the SAR must be distributed by September 30th.

If an extension has been filed to extend the due date for the Form 5500 to October 15th, the SAR is then due within two months after the close of the period for which the extension was granted - December 15th, in this example. Compliance surrounding the distribution of the SAR is mandatory, and penalties for willful noncompliance can include fines in excess of $100,000, imprisonment up to 10 years, or both.

For a copy of the EBSA revised model SAR for welfare benefits plans, click here. Stay on top of your compliance requirements by visiting OneDigital's Compliance Confidence Fresh Thinking Blog.