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" If your welfare plan (medical, dental, life insurance, disability, etc) has under 100 participants at the beginning of the year, you are exempt from filing Form 5500 if it is (a) unfunded, (b) fully insured, or (c) a combination of insured and unfunded. But wait, there’s more. The instructions to the 5500 toss in the following: "see 29CFR 2520.104-20." If you whip out your copy of the CFR, you will see an "and", as in "and for which, in the case of an insured plan—— (i) Refunds, to which contributing participants are entitled, are returned to them within three months of receipt by the employer or employee organization, and (ii) Contributing participants are informed upon entry into the plan of the provisions of the plan concerning the allocation of refunds." Based on the above rules for insured plans with under 100 participants being exempt from 5500 filing - has anyone run into someone getting fine for failure to file it they failed to address refund allocations? Did MLR requirements from the ACA address this enough that having the refund allocation detail in the SPD is unnecessary to still have the 5500 exemption? Has anyone ever had this issue come up post MLR/ACA as a road block to small fully insured plan exemption? I ask because I see many small insured plans that are not filing and do NOT have any reference to refunds or refund allocations. Some are claiming the MLR rules negate this since they dictate the refunds.

My client (company A) acquired a company (company B) in 2021. 2022 was the final year of B's 401(k). Since it was a SH plan with a generous plan design, ERISA counsel told us we could not merge the plan until end of year, 2022. Totally fine. Blackout started for participants on 12/28/2022 and the final asset transfer happened on 01/05/2023. Are we able to file the 2022 5500 as the final 5500 and mark that all assets have been transferred?

I am asking this in a half rhetorical manner. Client had been a single employer for 5500 filing and filed under 001. Then employer became a related employer due to an acquisition and joined parent's plan as adopting employer. Initial 001 Form 5500 had a final filing when the assets merged into the parent's plan. A few years later and due to ownership change, they are no longer related so the current plan is a MEP and the Client is spinning out their portion of the MEP into a stand alone plan (June 1, 2023). My experience has been that the effective date of the newly established spin-off plan should be June 1, 2023. The Client would use 002 since 001 had been previously used. Since this is a spin-off, there are protected benefits and no distributable events (that is not the issue). The service provider is insisting that the effective date be 1/1/2018 (effective date of the prior parent's plan). My concern is that once filed, the EBSA is going to ask about all of the missing prior 5500 filings, which could be avoided with a new effective date and I also believe that the 5500 must be marked as "First Year Filing". Any experience out there with using a prior effective date and what notices get generated? I vote for the 2023 effective date and 002 for the plan number. Thanks!

Start-up plan in 2020 expected to be a solo(k) plan covering only owner & possibly spouse (who did not work in 2020). Eligibility is age 21 & 3 months elapsed time, monthly entry dates. Owner actually hired a part-time employee in July 2020 who became eligible in November, and terminated in December. Testing determined no contributions were required for this NHCE employee. So the participant count on 1/1/20 was 1 (owner only) and count on 12/31/20 was 1 (owner only). Assets were under $250k the entire year. Does this plan need to file 5500-SF or can they use 5500-EZ and not file for 2020 due to assets under $250k?

The plan document provides that the plan year end is the last Friday of the December. The plan runs from 12/28/2019 - 12/24/2020 so form 5500 and 8955 were filed on the 2019 Forms. For 12/25/2020 - 12/31/2021 the Form 5500 and 8955 will be filed on the 2020 Forms. My biggest concern is that 2021 form 5500 and 8955 would then be skipped because there is no plan year that starts in 2021. The next plan year is 1/1/2022-12/30/2022. Due to the fact that the plan year starts in 2022 then the form 5500 and 8955 should be filed on the 2022 forms not the 2021 year. Another issue is that the year after would also be reported on the 2022 form 5500 and 8955 because the plan year is from 12/31/2022 – 12/29/2023. Any suggestions on how to handle this situation?

We took on a client - 403(b) plan - that never filed Form 5500. The plan was in existence since 2004. We are filing the late returns under the DFVC program. Since 5500-SF is not available for years prior to 2009, is it ok to file Form 5500 from 2004-2008 and Form 5500-SF for 2009-2019 or should we use the same Form for all open years? Thank you.

Hi to All, This question is about what to report on the 5500 or 5500-SF as a client's bond coverage, depending upon the date one chooses. I can find plenty of references that say that a bond coverage amount for purchasing purposes should be determined near the beginning of the year and should be based on the greatest amount of funds handled in the previous year. What I can't find is a reference stating that the bond amount reported on the 5500 should be the amount in force.......as of when? The first day of the plan year? The last day of the plan year? The reason it came up is that a plan had no bond in its first year of operations, calendar 2017. The employer purchased an adequate bond on 02/01/2018, and renewed that bond on 02/01/2019. The plan is subject to having an independent audit due to having over 100 participants. The employer bought a Colonial Surety retroactive bond for the minimum amount possible ($10,000) to cover 2017. Colonial will not sell a retroactive bond without having the subsequent years as well, so the employer paid for a total of 4 individual one year periods of coverage that run 11/01/2016-10/31/2017, 11/01/2017-10/31/2018, 11/30/2018-10/31/2019, and 11/01/2019-10/31/2020. The auditor is advising the client that he needs to decide whether or not to purchase more coverage for 2018 because of the one month, January 2018, for which he (now) has a $10,000 bond. He actually needed a $150,000 bond on exactly 01/01/2018 and he bought one, from a different company, on 02/01/2018, but the auditor's position is that this is still not sufficient. The auditor says that one might just let it go and not worry about it, were it nor for the fact that the plan is filing late which already draws attention to itself and reporting an inadequate bond amount would be just one more red flag. That led to another question, one of general procedure. We typically report on the 5500 the amount of coverage in force as of the end of the plan year, even though the amount is determined based on assets as of the first of the plan year. During the year, our clients will increase their bond coverages if we have advised them to do so based on the prior year's annual report. For example: A client has a $20,000 bond for all of 2018. We produce the annual report for 2018 sometime between 01/07/2019 and 09/14/2019. At that time, we advise the client that based on their assets at the end of 2018, they need to increase the coverage in 2019 from $20,000 to $30,000. The client dutifully complies and by 12/31/2019, the client has a $30,000 bond. When it's time to prepare the 2019 5500-SF, do we report $20,000 as the bond amount because that's what they had on 01/01/2019, or do we report $30,000, because that's what they had by 12/31/2019? Every place I have worked so far, we would report the $30,000 figure. So the questions are: 1. Does this client really need to go to the extra expense to increase the Colonial 2018 bond for that one month (January) that they were out of compliance and 2. When doing the 2018 5500, do we report the amount of coverage they actually had as of 01/01/2018 ($10,000) or the amount of coverage they had in force as of 12/31/2018 ($160,000)? Thank you as always for your ideas.

Four entities are in same controlled group/affiliated services group. 3 of the entities participate in one fully insured wrap welfare benefit plan (medical,dental, premium only plan). All insurance contracts for that plan are signed by the plan sponsor (i.e., one of the 3 entities). Since this plan had 140 participants at start of plan year, my understanding is that we will need to file Form 5500 for it. The remaining entity has its own separate fully insured wrap welfare benefit plan (medical, dental, premium only plan ). This entity is the plan sponsor and all insurance contracts are signed by it. There are only 22 participants at start of plan year. Does a 5500 have to be filed for this plan too, or is a 5500 not required for this plan until the plan reaches 100 participant threshold at start of another plan year? Related question: For annual discrimination testing, do you have to aggregate all the participants from both plans together or can you test separately? Thank you for any input .

In filling out the 5500 where one company has moved all of the plan assets to another company with that same Multiemployer plan, do you mark that the plan has terminated as the ending assets for company A are at zero and then fill out the information for the termination and say that it is a final 5500 and indicate the name of company B as the recipient of those funds?

We have had several clients receive rejection notices related to our Forms 2848 recently. All were related to DFVC filings. The notice stated the plan number was not included. However, the plan number was listed on the Form 2848 in the top right hand corner in the applicable box as well in the table on line 3. Has anyone else been receiving these? Are they being sent in error? Thank you!

Hello, Based on a unique situation that I never experienced before, am trying to figure out what to enter for Line 8(b). Scenario (with mock numbers but that captures the scenario). Starting Balance - 300,000 Contributions - 10,000 Dividends/Interest income etc. - 5,000 Ending Balance - 290,000 (there was loss in value of assets in the plan). So, question is, on Line 8(b) should I enter -25,000+5000= -20,000, comes from 25,000 loss in assets values and 5,000 income from Dividends/Interest? Then starting balance of 300,000 plus 10,000 contribution = 310,000 with loss of 20,000 leads to Ending Balance of 290,000. Thanks,

Father (88%) owner and adult Son (12%) owner are the only employees of company X. They are a corporation and not a partnership. The two make their contribution as a real estate investment with no eligible plan assets. Does this need to be filed with a full Form 5500 or can it qualify for a title 1 waiver?

Hi to all, We have a client who has not provided sufficient data to enable us to produce an annual report or a 5500 since 2014. Please don't go into the fact that we should have fired the client long ago. There are extenuating circumstances. The bottom line is that they have seen the light and have begun to provide data. We are now in a position to provide them with a 5500 to file for 2015 and 2016. Since they are not under examination at this time, we can use the DFVCP program. From their instructions it would appear that we are supposed to file all delinquent years at one time. However, we are nowhere near being ready with 2017's form and may not be for several months. What are your thoughts on waiting a few months and doing them all at one time versus filing what we do have and doing another submission later on? What if they do get a letter saying they are under examination in the interim while we are waiting to get the 2017 form done? Your ideas are appreciated, as always.

Large plan (125 participants) filed Form 5500 but failed to include an audit with the filing. Are penalties automatic or are there allowances for first-time offenders? The instructions say that penalties MAY be assessed or imposed, unless failure to file properly is for reasonable cause. What would they consider reasonable cause?

Good afternoon to all: From a colleague in my office: "Requesting advice regarding completion of Schedules A and C for large plans using a John Hancock style (insurance) product. We believe that Commissions to Insurance Agents and TPA Fees deducted from plan assets (Distribution and loan fees) are reported on Schedule A. Revenue Sharing (Forum Compensation) could be reported on the A or C and if reported on the A then it would be left off the C. Any thoughts on this? " Thank you as always for any advice.

Has there been any news about the possibility of new Form 5500s with major updates for the 2019 plan year? Federal Register article

Good afternoon to all, We have virtually no experience with MEPs. We have a client who owns two separate businesses and maintains a 401(k) plan for each business. One has well under 100 employees and one is dangerously close to needing an independent audit. There is a new investment advisor to the plans and she is wanting to create a MEP out of the two plans, claiming that there will be lower fees from the recordkeeper if they become a MEP. My question is this: Is this potential new MEP considered one plan with one 5500 to file, and will it now be thrust into the category where it needs an independent audit because it will have over 100 participants with the two companies combined? Your advice is greatly appreciated.

Hello, so quick question regarding a late 5500-SF: Recently when going through finances I noticed that I forgot to file my 5500-SF on the efast.dol.gov website in 2015 and 2016. (Well, I didn't "forget" but rather I missed a special link in my payroll, which passes the final electronically-filled form to efast...). I have filed 5500-SFs in years prior, and had planned to continue do so. However I am a one participant plan with assets < $250K, so it is my understanding that it is was technically not necessary to file. The other day out of panic, when I noticed those 2 years weren't filed in efast I submitted them anyway. However I realized afterward there is a substantial penalty for late filing, and these late forms are now visible from within efast... My questions are as follows- 1) Will the fact that I submitted late 5500-SF forms to the efast website trigger an audit? 2) Will I be charged a penalty? And if so, is there a way I can pay any fees in a advance of receiving a bill from the govt? I noticed in the DFVCP penalty calculator it states "Form 5500-EZ filers are not eligible for the DFVC program." which concerns me greatly... I have yet to receive any late filing notice but I fear the clock might be ticking... Any advice would be appreciated!!

Hi yall, I'm working on a 2017 Form 500 for a plan and have a small issue There was one participant got refund of $50 loan principal overpayment in 2017 for a 2016 loan. How can i characterize this refund on 5500? I was thinking about putting that $50 as negative ($50) in other income or $50 in the Benefit payment - directly to participants. I looked into 5500 instruction Line 2c. Other income. Enter all other plan income for the plan year. Do not include transfers from other plans that are reported on line 2l. Other income received and/or receivable would include: 1. Interest on investments (including money market accounts, sweep accounts, STIF accounts, etc.). 2. Dividends. (Accrual basis plans should include dividends declared for all stock held by the plan even if the dividends have not been received as of the end of the plan year.) 3. Rents from income-producing property owned by the plan. 4. Royalties. 5. Net gain or loss from the sale of assets. 6. Other income, such as unrealized appreciation (depreciation) in plan assets. To compute this amount subtract the current value of all assets at the beginning of the year plus the cost of any assets acquired during the plan year from the current value of all assets at the end of the year minus assets disposed of during the plan year. Line 2e(1) Directly to participant. payments made (and for accrual basis filers) payments due to or on behalf of participants or beneficiaries in cash, securities, or other property (including rollovers of an individual’s accrued benefit or account balance). Include all eligible rollover distributions as defined in Code section 401(a)(31)(D) paid at the participant’s election to an eligible retirement plan (including an IRA within the meaning of Code section 401(a)(31)(E)); How do yall think this should be in the 5500? I'm leaning more on the Benefit payments directly to participant. This is a new situation for me. I appreciate all the inputs. Thank you.

(I originally posted this topic in the VEBA message board, but was not able to get much input. I'm hoping someone will see it here, and provide advice/guidance) I have a WRAP document that lists the following plans in Exhibit A as being part of the WRAP: Group Health Plan - A Group Health Plan - B Group Health Plan - C Group Dental Plan Group Basic Life Plan Group Voluntary Life Plan Group AD&D Plan Group LTD Plan This is a large plan (10,000+ participants). The Group Health Plans are funded through a VEBA trust. This results in the plan needing to file Schedule H and have an IQPA audit the plan. The other plans (Dental, Life, etc.) do not flow through the VEBA (but they are part of the WRAP). The employee portion of the premium is withheld and remitted to the applicable insurance companies as would be done in a fully insured plan. As far back as I can see (10+ years), the Form 5500 Schedule H and the auditor's financial statements have only reported assets and activity related to the VEBA trust. My understanding is that they audit the plan as a whole, but the financials only cover the Trust. The question has come up this year as to whether or not that is the correct way to prepare the Schedule H and Financials. Should the other plans be included too? I do not believe it would affect the "balance sheet" portion of the Schedule H because the fully-insured benefits would have a net-zero affect, but it would affect the "income statement". Any help or advice is greatly appreciated.

VFCP filing will be prepared for overcharged participant fees to participants and overcharged fees to plan sponsor as a result of systematic error. Once the principal amount and lost earnings are restored to the plan, does the plan sponsor also have to amend the Form 5500 for prior years? Overcharged fees are approximately $50,000 and the error goes back to 2014.

Hello again Pension mavens! Quick question about the Plan Characteristic code 2A for DC Pension Features. If the Plan has an integrated allocation would you list 2A as a characteristic code on the 5500? The description seems to suggest that you would since the allocation method provides for an additional rate on comp above the TWB threshold. Thanks for your time!

Hi To All, Who would like to settle a tiny difference of opinion in our office? One of us thinks that Plan Characteristic Code 2T would apply to ALL such plans (with participant directed accounts) as those maintained by John Hancock, American Funds, Mass Mutual, Lincoln et al because there is a mechanism of some sort in dealing with money belonging to participants who never made a fund election. It won't just sit in cash. Typically it goes to a Target Date fund based on the participants' birthdays but it could be something else. So wouldn't all such plans automatically check 2T on the 5500? The other person in our office thinks that 2T only applies if there actually are participants who have defaulted into the automatic investment. He thinks that merely having the provision is not enough; there must actually be such people in the plan. What do the experts say? Thanks!

I was just made aware that the 2016 5500 filings for our plans failed to include the audited financial reports. The reports were done on time but the wrong attachments were uploaded to EFAST. No notice was received from the DOL, as of yet, but I would like to get this corrected as soon as possible. Do I amend the filings via EFAST or is there another more efficient way?

The health advocacy type benefits seem to be in a grey area to include a Schedule A or not. This benefit conducts the following: helps locate providers, addresses errors on bills/claims, answers questions on coverage, and asissts with denials and appeals. Would you include a Schedule A? (Plan Documents and SPD not available for referencing). Many thanks for your assistance!