Form 5500 is a required annual tax form that collects and reports information regarding the qualification of the 401(k) plan. A good 401(k) provider will provide you with a signature-ready form for you to review and file each year.
Key Takeaways:
- Form 5500 reports your 401(k) plan’s financial condition, operations, and compliance status to the IRS and Department of Labor, helping ensure retirement plans follow ERISA and tax rules and working in participants’ best interests.
- Most employers sponsoring a 401(k) plan must file Form 5500 annually. Small plans typically file Form 5500-SF, while Solo 401(k) plans file Form 5500-EZ once assets reach $250,000.
- Late or missed Form 5500 filings can trigger significant penalties, including IRS fines of up to $15,000 and Department of Labor penalties of up to $1,100 per day, making timely filing and provider support critical.
Why the need for the Form 5500?
Form 5500 is required for federal agencies to verify that 401(k) plans follow IRS and ERISA rules. The IRS, Department of Labor, and Pension Benefit Guaranty Corporation jointly developed the 5500-series forms for employee benefit plans. The purpose is to create a clear means to satisfy the Internal Revenue Code needs as well as satisfy the rules within the Employee Retirement Income Security Act (ERISA). The type of 5500 your firm files is based on number of employees, whether your plan is a group plan or a Solo 401(k), and the amount of plan assets. For self-employed 401(k) users (more details below), you may or may not need to file based on the amount of money in your plan.
See how ShareBuilder401k supports small businesses like yours and can help simplify compliance.
If I sponsor a 401(k) plan, do I have to file Form 5500?
Most 401(k) plan sponsors must file a Form 5500 every year. Plans with fewer than 100 eligible participants typically qualify to file Form 5500-SF, a simplified version. Plans with over 100 employees must file the standard Form 5500. Both versions are relatively simple to submit and are filed electronically through the DOL’s site via the EFAST2 system filing.
Solo 401(k) plans have separate rules. Owner-only businesses only need to file Form 5550-EZ once their plan assets amount to $250,000 or greater. These can either be mailed in or filed electronically using Form 5500-SF. Solo 401(k) plans can start small, but filing requirements begin once assets cross this threshold.
Form 5500 Types for 401(k) Plans
| Standard Form 5500 | Form 5500-SF | Form 5500-EZ |
|---|---|---|
| For group 401(k) plans with 100+ participants | For small group plans with fewer than 100 participants | For Solo 401(k) (owner-only) plans |
| Includes additional schedules | Simplified reporting | Required once assets reach $250,000+ |
| Filed electronically through EFAST2 | Filed electronically through EFAST2 | Can be mailed or filed electronically via 5500-SF |
When does the form have to be filed?
Form 5500 must be filed by the last day of the seventh month after the plan year ends. For example, that means July 31st is the deadline for calendar year plans. You can be granted a 2 ½ month extension if needed by submitting IRS Form 5558 before the original due date. Staying ahead of deadlines and planning with forethought is especially important when managing compliance tasks.
What if I forget to file?
Missing the Form 5500 deadline without filing for an extension can have significant consequences. The IRS can assess a $25 per day late-filing penalty, up to a maximum of $15,000. The Department of Labor’s penalties can be even higher, reaching up to $1,100 per day with no maximum limit.
Will my 401(k) provider assist me with Form 5500?
Not all 401(k) providers prepare a signature-ready Form 5500 as part of their service, or charge fees for it as an add-on. Without provider support, employers may need to involve accountants or third-party administrators each year to ensure that they remain compliant. Solo 401(k) providers vary widely, and many other low-cost options do not include such support, so it is important to understand what your provider handles before signing up.
Ready to simplify your annual filing? All ShareBuilder 401k plans offer a signature-ready Form 5500 and automate compliance. See how ShareBuilder 401k makes Form 5500 and support easy and affordable.
FAQs
What is Form 5500 used for?
Form 5500 is used to report the financial condition and operations of your 401(k) plan. It helps the IRS and DOL monitor compliance with ERISA and tax rules, ensuring that retirement plans are being managed properly for the benefit of participants.
Who must file Form 5500?
Most employers who sponsor a group 401(k) plan must file annually. Smaller plans with under 100 participants typically use Form 5500-SF, while larger plans with 100 or more participants file the full Form 5500. Solo 401(k) plans file Form 5500-EZ once assets reach $250,000.
What happens if I file Form 5500 late?
Late filings can result in penalties. The IRS may charge $25 per day up to $15,000, while the Department of Labor may charge up to $1,100 per day. Filing on time and requesting extensions when needed can help avoid these unsavory consequences.
Do Solo 401(k) plans always have to file Form 5500-EZ?
No. Solo 401(k) plans only need to file Form 5500-EZ when plan assets amount $250,000 or more. No annual filing is required before that.
Can my 401(k) provider file Form 5500 for me?
Your 401(k) provider may be able to prepare a signature-ready Form 5500, but they do not submit it on your behalf— the plan sponsor must do the actual submission. Provider support makes the process easier by ensuring the form is accurate and complete before you file.