Employers that maintain a qualified retirement plan must file IRS Form 5500–Annual Return/ Report of Employee Benefit Plan. Qualified retirement plans include defined benefit, profit-sharing, money purchase, and 401(k) plans. SIMPLE and SEP plans do not have to file this form. Form 5500 is due on the last day of the seventh month following the end of the year. For example, a December year-end would be due on July 31.
An extension of time to file the return may be granted. To request an extension, file Form 5558–Application for Extension of Time to File Certain Employee Returns. File this request before the due date of the return. As with all correspondence with the tax authorities, we suggest you send this Certified Mail/Return Receipt Requested. This will provide you with proof of mailing. An extension can be granted for an additional 2½ months. For a December year-end with a valid extension, the return would be due on October 15.
The version of the form that would be required is as follows:
Form 5500―Employers with more than 100 participants. This requires Schedule H–Financial Information to be completed. The plan also requires to be audited by an independent Certified Public Accountant.
Form 5500 SF (short form)―Employers with less than 100 participants.
Form 5500 EZ―One participant plan.
Failure to file these returns can be very expensive. The main penalties are as follows:
- Up to $1,100 per day for each day a plan administrator fails to file a complete report.
- $25 per day penalty (up to $15,000) for not filing returns of certain plans of deferred compensation or trusts and annuities by the due date.
- $1,000 for failure to file actuarial statement Schedule MB or Schedule SB.
ACTION ITEM: File your Form 5500 on time to be in compliance. If you can't complete by the due date, request an extension of time to file.
Thomas F Scanlon, CPA, CFP®
Would a 501(c)(3) non-profit corporation need to file form I.R.S. 5500, if on its 403(b) program there is no contribution from the employer, but only voluntary contributions of employees?
Non-profit organizations that maintain a 403(b) plan are required to file Form 5500. Smaller 403 (b) plans (generally fewer than 100 employees) are able to use Form 5500-SF (Short Form 5500) which is only 2 pages.
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