What is IRS Form 5500? Form 5500 is an annual reporting form that employers must file with the Department of Labor (DOL) and the Internal Revenue Service (IRS) to provide information about their employee benefit plans. The key points about Form 5500 are:

• It is required to be filed for any employee benefit plan covered by the Employee Retirement Income Security Act (ERISA), including pension plans, individual retirement accounts (IRAs), medical/dental/life insurance plans, severance pay plans, and more.

• The purpose of Form 5500 is to provide the DOL and IRS with information to ensure employers are properly managing and protecting their employees’ benefit plans.

• The specific version of Form 5500 that must be filed depends on the size and structure of the plan, with options including:

  • Form 5500 for plans with 100 or more participants

  • Form 5500-SF for plans with less than 100 participants

  • Form 5500-EZ for plans with only one participant (owner/partner and spouse)

• Employers must file Form 5500 electronically through the EFAST2 portal by the last day of the 7th month after the plan year ends, or face penalties for late or incomplete filing.

• Common errors to avoid include incorrectly reporting zero plan participants and exceeding contribution limits.

In summary, Form 5500 is an important annual reporting requirement for employers offering ERISA-covered employee benefit plans, providing transparency and compliance oversight.

What is the deadline to file form 5500? The deadline to file Form 5500 is the last day of the 7th month after the plan year ends. For plans following the calendar year (plan year ending December 31), the filing deadline is July 31. Employers can request a 2 1/2 month extension by filing Form 5558, which would extend the deadline to October 15th.

• For non-calendar year plans, the filing deadlines vary based on the plan year end date:

  • Plan Year End | Filing Deadline | Extension Deadline

  • 1/31 | 8/31 | 11/15

  • 2/28 | 9/30 | 12/15

  • 3/31 | 10/31 | 1/15

  • And so on through 12/31 | 7/31 | 10/15

In summary, the standard deadline to file Form 5500 is the last day of the 7th month after the plan year ends, with a possible 2.5 month extension available by filing Form 5558.

Does it make sense to file a Form 5500 even if my account balances are less than $250k? We often complete form 5500 even when the total amounts are below $250k. The main reason is that it starts the statute of limitation with the IRS, it helps with reconciling the account contributions, and it protects us both in case there was other plans outstanding that triggers the 5500 filing.

How is the $250k calculated for 5500 purposes? If the total assets of a one-participant plan and the assets of all other one-participant plans maintained by the plan sponsor at the end of the plan year exceed $250,000, the sponsor is required to file a Form 5500-EZ for each of their one-participant plans. It’s important to note that some plan sponsors mistakenly believe that the $250,000 filing requirement applied individually to each plan, each participant, or each investment. The total assets are total by year end of the calendar year.

See this IRS article for add’l insight: https://www.irs.gov/retirement-plans/financial-advisors-are-assets-in-your-clients-one-participant-plans-more-than-250000

What is IRS Form 5558? IRS Form 5558 is filed to apply for a one-time extension to file Form 5500. A separate Form 5558 is required to be filed for each retirement plan for which an extension is needed. As an example, if a company has a cash balance plan and also a 401(k) plan, a separate Form 5558 must be filed for each of the plans.

The deadline to file Form 5558 is July 31st for the previous calendar year. The form allows an extension of 2 1/2 months or up to October 15th to file form 5500.

Do you have an e-confirmation that shows that the IRS has received and approved the extension for Form 5558? Unfortunately, the IRS is unable to confirm acceptance of Form 5558. However, we rarely encounter issues with extensions being rejected. In addition, we file extensions using a certified letter that shows evidence of the filing. As a result, we rarely see extension filing problems.

Clients will need to ensure they communicate to us the need for an extension, even though we will typically file one if we do not have the information to file a completed form 5500. As long as you communicate the desire to file an extension, we will take the responsibility for submitting the extension and dealing with any IRS issues should they claim it was not received.

I received an IRS letter noting that my Form 5558 was approved. What should I do with the letter? On occasion, the IRS issues letters confirming that the extension was received and requesting that a 5500 be filed by the October 15th deadline.

If you receive this letter, you may forward it to us. But there is nothing else you need to do. We will be responsible for the filing deadline and ensuring you meet the requirement as long as we receive all applicable filing information.

So, in generally, you can just retain the letter for your records, and we will confirm when the final form 5500 is completed. We will also upload it into your SmartVault account.

I heard that if I file an extension for my business, it automatically extends the 5500 deadline and no 5558 is required. Is this true? This is technically correct. However, we always recommend filing form 5558 for a few reasons.

Companies are automatically granted an extension of time to file Form 5500 until the extended due date of the company’s federal tax return (and are not required to file Form 5558) if the company meets all of the following conditions:

1. The plan year and the company’s tax year are the same;

2. The company has been granted an extension of time to file its federal tax return to a date later than the normal due date for filing Form 5500; and

3. A copy of the extension application to file the federal tax return is retained with the retirement plan records.

There should be a check mark under the “automatic extension” box in Part I, line B at the top of the form. An extension that is granted using this exception cannot be further extended by filing Form 5558 subsequent to the normal due date (without extension) of Form 5500.

The one big negative with this option is that the Form 5500 is due on the date the tax return is required rather than then extension date of Oct 15th if filed with form 5558. For example, an S-Corp tax return is due on Sept 15th and if form 5558 is filed then the 5500 is due on Oct 15th. If this method is selected, then the form 5500 is due on Sept 15th just like the S-Corp.

What is Form 1099-R? Form 1099-R is an IRS information form that reports potentially taxable distributions from certain types of accounts, many of which are retirement savings accounts. The key points about Form 1099-R are:

• It is used to report distributions from annuities, profit-sharing plans, retirement plans, IRAs, insurance contracts, or pensions.

• Anyone who receives a distribution over $10 from these types of accounts should receive a 1099-R form.

• The form is provided by the plan issuer or account custodian.

• Form 1099-R is also used to record death or disability benefits paid out to a beneficiary’s estate, as well as account rollovers and loan defaults.

• The form contains detailed information about the distribution, including the gross amount, taxable portion, any taxes withheld, and distribution codes to specify the type of distribution.

• Recipients of a 1099-R will need to use the information on the form when filing their tax return to properly report the income.

In summary, Form 1099-R is an important tax document that reports distributions from retirement accounts and other similar plans, which the recipient must then account for on their tax return.

When is Form 1099-R required to be filed? Form 1099-R must be filed with the IRS each year to report distributions from retirement accounts, pensions, annuities, and other similar plans.

• The deadlines for filing Form 1099-R for the 2023 tax year are:

  • Recipient copy: January 31, 2024

  • Paper filing: February 28, 2024

  • E-filing: April 1, 2024

In summary, Form 1099-R must be filed annually by the end of January for the recipient copy, and by the end of February/April for IRS filing, for any distributions of $10 or more from retirement accounts, pensions, and similar plans during the previous tax year.

Why am I receiving a 1099-DIV from my custodian for my investment earnings? Should I be receiving a 1099-R from my plan for investment earnings? Your retirement plan is a tax-exempt trust. As such, you should not be receiving a 1099-DIV, 1099-INT, or 1099-B for any investment earnings. These 1099s would only be issued for non-qualified brokerage accounts. If you received one of these forms, your investment custodian has likely set up your plan incorrectly. Please contact them ASAP so that these forms are corrected. In addition, you should not be receiving a 1099-R each year. These 1099s are issued for retirement distributions. So, if you rolled money over or distributed money from one of your plans, then you would receive this form.