Form 5500: Employer Compliance Overview

Whether a Form 5500 is required depends primarily on the size and funding structure of the plan. In general, welfare benefit plans that cover 100 or more participants at the beginning of the plan year must file, regardless of whether the plan is fully insured, self-funded, or a combination of both. Importantly, the definition of “participant” includes not only active employees but also former employees who remain covered under the plan, such as COBRA qualified beneficiaries. Covered spouses and dependents, however, are not counted toward this threshold.

For purposes of determining the 100-participant threshold, participants must be counted across all benefits that are part of the same ERISA plan (such as medical, dental, vision, disability, or life), not separately for each benefit. Oftentimes, group health benefits are combined under one ERISA plan document (commonly referred to as a “wrap plan”) and reported under a single plan number on Form 5500. In these situations, an employee is counted as a participant if they are enrolled in any of the benefits under that plan.

Smaller plans are not automatically exempt. A plan with fewer than 100 participants may still be required to file if it is considered “funded,” such as when benefits are paid through a trust or other segregated account. In addition, multiple employer welfare arrangements (MEWAs) are generally subject to Form 5500 filing obligations regardless of size.

Form 5500 must be filed annually by the last day of the seventh month following the end of the plan year. For calendar-year plans, this results in a standard filing deadline of July 31. Employers that need additional time may request an automatic extension of up to two and a half months by filing Form 5558 by the original due date, extending the deadline to October 15 for calendar-year plans.

All Forms 5500 must be submitted electronically through DOL’s EFAST2 system. Paper filings are no longer accepted. Given the technical nature of the filing and the coordination between carriers, third-party administrators, or other vendors, employers should begin gathering data well in advance of the deadline.

Failure to timely file a required Form 5500 can result in significant financial exposure. The DOL has authority to assess civil penalties of over $2,739 per day (as of the date of this publication, adjusted annually for inflation), beginning on the date the file was due. The IRS may also impose separate penalties, which can reach up to $250 per day with a maximum of $150,000 per plan year.

Beyond monetary penalties, late or missed filings can increase the likelihood of a regulatory audit and may raise fiduciary concerns under ERISA. Because Form 5500 filings are publicly available, noncompliance may also prompt participant inquiries.

Recognizing that filing failures do occur, the DOL maintains the Delinquent Filer Voluntary Compliance Program (DFVCP), which allows plan sponsors to correct late filings at reduced penalty levels. Under this program, penalties are capped based on plan size and are lower than standard enforcement penalties. For many employers, utilizing the DFVCP may be a practical approach to resolve missed filings when the issue is identified proactively before any DOL enforcement action has begun. Employers should consult with their advisors to determine whether this program is appropriate for their situation.

In addition to filing Form 5500, plan administrators of fully insured and funded health plans are typically required to provide participants with a Summary Annual Report (SAR). The SAR is a narrative summary of the information reported on Form 5500 and is intended to keep participants informed about the plan’s financial status.

For most plans, the SAR must be distributed within nine months after the end of the plan year, or within two months after the extended filing deadline if an extension was obtained.