With limited exceptions (e.g., SIMPLE IRA and SEP arrangements), retirement plans covered by ERISA must file Form 5500-series returns annually. Filings are due the last day of the 7th month after the plan year end, but may be extended for an additional 2 ½ months by filing IRS Form 5558; for a calendar year plan that’s July 31 extended to October 15. As the plans are tax-deferred entities, these returns are purely informational.
The type of Form 5500 a single-employer plan files depends on the number of participants and the type of assets it holds. The remainder of this article will focus on determining the appropriate type of Form 5500 filing for a single-employer, non-foreign plan. Generally, related businesses under Internal Revenue Code §414(b), §414(c) and §414(m) are treated as single-employers for Form 5500 reporting purposes.
Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan, may be filed by a ‘One-Participant Plan’. A One-Participant Plan is a qualified retirement plan [other than an Employee Stock Ownership Plan (ESOP)] that
(i) either covers only an owner (or owner and spouse) and that owner (or owner and spouse) own(s) the entire business (which may be incorporated or unincorporated), or
(ii) covers only one or more partners (or partners and their spouses) in a business partnership, and
(iii) does not provide benefits for anyone except owner (or owner and spouse) or one or more partners (or partners and their spouses).
A One-Participant Plan must file an annual return unless the plan’s end of year assets (aggregated with all other One-Participant Plans of the employer) total $250,000 or less. However, regardless of assets, a One-Participant Plan must always file a return for its final year.
Most One-Participant Plans (unless they have more than 100 participants or hold assets that are not Eligible Plan Assets – see discussion below) have the option to electronically file an abbreviated version of Form 5500-SF. Plans not eligible to do so, or plans that simply prefer to avoid electronic filing, must file Form 5500-EZ; Form 5500-EZ is the only paper-filed annual return.
Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, may be filed by a ‘Small Plan’ (i.e., generally have fewer than 100 participants at the beginning of the plan year), which:
(i) Meets the conditions for being exempt from the requirement that the plan’s books and records be audited by an independent qualified public accountant (IQPA) – see discussion here
(ii) Has 100% of its assets invested in certain secure investments with a readily determinable fair value, and
(iii) Holds no employer securities.
To expand on item (ii), only plans investing solely in Eligible Plan Assets may file Form 5500-SF. Eligible Plan Assets are defined in detail at line 6a on page 11 of the 2012 Form 5500-SF instruction here http://www.dol.gov/ebsa/pdf/2012-5500-SFinst.pdf .
Form 5500, Annual Return/Report of Employee Benefit Plan, must be filed for a plan that is not a One-Participant Plan, and is either not eligible to or chooses not to file Form 5500-SF. A plan that either (i) holds assets not meeting the definition of Eligible Plan Assets, or (ii) covers 100 or more participants as of the beginning of the plan year (a ‘Large Plan’) generally must file Form 5500.
A Large Plan’s filing typically requires the attachment of an independent qualified public accountant’s audit of the plan’s books and records, though there is some ability to defer audit if the plan experiences a plan year of seven months or less. Further, a plan covering between 80 and 120 participants may elect to file as a Small Plan if it filed as a Small Plan in the prior year (thereby avoiding audit).
Forms 5500 and 5500-SF (except 5500-SFs filed for a One-Participant Plan) for 2009 and later plan years are available for download at www.efast.dol.gov. You may request a copy of Form 5500-SF or Form 5500-EZ filed for a One-Participant Plan, which are not available for public inspection, by completing IRS Form 4506 Request for Copy of Tax Return.
Sites and additional resources from IRS and DOL, including various form instructions, are available here: