Understanding the Filing Requirement of a Form 5500

Form 5500 is a report that shares detailed information on plan qualifications, financial conditions, and plan operations and investments.

The Internal Revenue Service (IRS), Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC) collaboratively established the Form 5500-series that discloses annual reporting requirements under ERISA and the Internal Revenue Code.

Most ERISA-covered retirement plans, including most 401(k) plans, must file an annual Form 5500 series return, subject to applicable exceptions. This form is designed to reveal plan-related information to the Federal government and plan participants. The purpose is to make sure that employee contributions and investments remain protected.

There are three variations of the form.

Form 5500 Types and Requirements

Form 5500

Form 5500 is designated for most public and private sector companies that provide plans.  While plan size often drives the filing format, some plans with fewer than 100 participants may still need to file the long Form 5500 depending on their facts and required schedules. It must be filed using the DOL ERISA Filing Acceptance System (EFAST2).

Form 5500-SF

Form 5500-SF is designed for businesses that sponsor plans with less than 100 participants on the first day of the plan year. A simplified version of this form can be filed if a business meets the following criteria:

• The plan meets the DOL independent audit waiver requirements
• The plan is 100% invested in “eligible plan assets” with readily determinable fair value (i.e., mutual funds, variable annuities)
• The plan holds no employer securities

This form must also be filed electronically using the EFAST2 System.

Form 5500-EZ

Form 5500-EZ is designed to cover a business owner and their spouse only; this form does not include employees. If total plan assets are $250,000 or less, filing will not be necessary. If you must file this form, it can be completed using the EFAST2 System or by mail. 

For plan years beginning on or after January 1, 2024, filers meeting the IRS mandatory electronic filing threshold generally must file Form 5500-EZ electronically through EFAST2. 

When Must an Audit Report be Filed with Form 5500?

Generally, large plans and certain small plans that do not satisfy the DOL audit waiver requirements must include an independent qualified public accountant (IQPA) audit report with their Form 5500 filing. This report is the opinion of the third-party CPA as it pertains to the plan's financial statements – specifically noting if the information is fairly represented in accordance with the U.S. Generally Accepted Accounting Principles (GAAP).

This audit can be costly, adding thousands to the cost of filing Form 5500. Many companies can lessen the financial impact by cashing out small account balances related to terminated plan participants.

How to File Form 5500

Check Filing Requirements

First, it is essential to determine how many plan participants a business has in their 401(k) retirement plans. For defined contribution plans, eligibility for small-plan simplified reporting (including the audit waiver) is now based on participants with account balances, rather than all employees who are eligible for the plan. The Form 5500 reflects this on Line 6g(1) (“Number of participants with account balances as of the beginning of the plan year”). 

In practice, a plan that previously triggered “large plan” status due to many eligible employees who did not participate may now qualify as “small” if it has fewer than 100 participants with balances at the beginning of the year.

Create an Account with the Department of Labor (DOL)

EFAST2 is the required electronic filing system for Form 5500/5500 SF (DOL/IRS/PBGC), and paper filing is not allowed. If an employer is filing for the first time, they must create an online account and set up electronic signing credentials to file.

• EFAST2 Login Update: EFAST2 user credentials have moved to Login.gov, so users can no longer sign in using the legacy EFAST2 user ID and password.
• Extension Filing Update: Beginning 01/01/2025, Form 5558 (Form 5500 filing extension) can be filed electronically through EFAST2.

Begin the Filing Process

Once logged into the EFAST2 account, there will be prompts to answer basic identifying information. This includes specific details about the plan benefits, such as:

• The start date of the plan
• The number of participants
• Plan sponsor details
• Plan administrator details
• Plan funding information
• Provided benefits details
• Schedule plans (dependent on plan characteristics)

Employers or the authorized person may be prompted to provide additional supplemental documentation. This can include:

• Reports from accountants (if the plan meets the requirements for an audit)
• Actuary contact information (for a defined pension plan)
• Insurance contract details (if applicable)
• Schedules about liabilities and assets

Double-Check for Accuracy

Proofread Form 5500 carefully. Submitting an inaccurate form could result in rejection and increase the compliance risk. DOL and IRS could potentially implement fines for inaccuracies, mainly if information is left out purposely or false. Tips for completing the form include:

• Reread answers carefully
• Steer away from replicating responses from the previous year
• Check that information is in the correct section using the spaces provided
• Cross-check names, plan numbers, and codes for misspellings and errors
• Review the file in IFILE by choosing the "View PDF" option before submitting

Taking the extra step to double-check your work can save you a lot of headaches and help ensure you are submitting an accurate and correct form.

Submit Form

The deadline for Form 5500 is the last day of the seventh month after the plan year ends. For example, if the plan follows a regular calendar year, this day would be July 31. If needed, employers can request a two-and-a-half-month extension, giving them until October 15 to submit their form and supporting documentation.

What are the Penalties for Failing to File Form 5500 on Time?

Unfortunately, most employers aren't aware they've missed a Form 5500 filing until they receive a notice from the IRS or DOL. This notice can take up to a year or more after Form 5500 is due. By this time, a substantial number of penalties have accrued. A late Form 5500 is subject to the following IRS and DOL penalties:

• $250 per day cost, with a maximum fine of $150,000 for the IRS
• Up to $2,739 per day (as indexed for inflation), with no maximum for the DOL

However, as an employer, if the DOL hasn't notified you about your missing Form 5500, you can file a late return using the DOL's Delinquent Filer Voluntary Compliance Program (DFVCP). This is a lower, flat penalty price.

The DFVCP has a maximum penalty for a single late Form 5500. For small 401(k) plans, it's $750; for large plans, it's $2,000. This penalty also includes a "per plan" maximum. The "per plan" cap limits the penalty to $1,500 for small plans and $4,000 for large plans, no matter the number of late Form 5500s filed simultaneously.

Are Past Form 5500s Available to the Public?

Yes. The Public can view past electronically filed Form 5500s through the DOL's Form 5500/5500-SF Filing Search; however, public availability depends on the form type.

Does Form 5500 Information Have to be Disclosed to Plan Participants?

Yes. Plan participants must receive a Summary Annual Report (SAR.) SAR is a summary of Form 5500. The summary must include the following:

• Administrative fees paid from plan assets
• Distributions paid to participants and beneficiaries
• Total plan value
• Each participant has the right to request a full copy of Form 5500

The deadline for distributing SAR to plan participants is either nine months after the end of the year plan or two months after Form 5500 was due.

What's New for the 2025 Plan Year Form 5500

Updated Plan Characteristics Codes (2025)

The agencies updated certain plan characteristic codes for 2025 (mostly affecting defined benefit plans), and these codes are updated annually. Changes include new codes 1J, 1K, and 1L for multiemployer DB plan terminations (mass withdrawal, plan amendment, and insolvency), a new code 1G for a variable annuity benefit formula, and a clarification to code 1H for terminated single-employer plans covered by PBGC.

New Filing Structures and Schedules (2025 Plan Year)

DCG (Defined Contribution Group) Consolidated Filing + Schedule DCG
Certain groups of defined contribution plans may be able to file a consolidated Form 5500 using a Defined Contribution Group (DCG) reporting arrangement. This approach uses the new Schedule DCG to report required plan-level information as part of the consolidated filing.

Multiple Employer Plans (MEPs) / Pooled Employer Plans (PEPs) Reporting + Schedule MEP
Form 5500 reporting for MEPs and PEPs has been updated, primarily through the addition of Schedule MEP. If you participate in, sponsor, or advise a MEP, PEP, or DCG reporting arrangement, confirm early in the filing process whether additional schedules (such as Schedule MEP) apply.

Know The Requirements

Understanding Form 5500 filing can be overwhelming but knowing the requirements can save an employer a lot of money. A 401(k) provider is typically who is responsible for preparing Form 5500s while meeting the annual filing requirement is the employer’s responsibility. Sadly, many employers are unaware of the Form 5500 filing requirements or due dates, which costs them substantial penalties. Employers must be aware of and understand their 401(k) plan's filing requirements, which will allow them to avoid an expensive audit as well as monitor the performance of their 401(k) provider.

Interested in learning more about 5500s? Check out our Fiduciary Academy, Why Filing Your Form 5500 is So Important!

Investment advisory services offered through OneDigital Investment Advisors LLC (“ODIA”). OneDigital Investment Advisors LLC and their associates cannot provide tax or legal advice. Please note the other companies referenced on this website are separate entities from OneDigital Investment Advisors LLC and are not authorized to provide, and do not provide, investment advisory services. ID: 00711793