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If you're a business owner offering a 401(k) plan, there's a good chance you've heard of Form 5500. It might sound like just another piece of IRS paperwork, but don’t underestimate its importance. This annual filing plays a critical role in maintaining compliance with ERISA (the Employee Retirement Income Security Act) and keeping your retirement plan transparent to both the federal government and your employees.
Still, many employers find the Form 5500 process confusing. What version do you need? Do you need an audit? What happens if you file late? In this guide, we’ll break down the most frequently asked questions in plain English, so you can stay on top of your responsibilities and avoid costly penalties.
What Is Form 5500?
Form 5500 is an annual filing required by the IRS and Department of Labor (DOL). It reports important information about your 401(k) plan—things like assets, participant count, fees, investments, and plan compliance with federal laws like ERISA.
But this isn’t just paperwork for the government. Employees can access Form 5500 too. It gives them insight into how their retirement plan is being managed, what it costs, and how it’s performing.
Even though your 401(k) provider or third-party administrator (TPA) usually handles the form’s preparation, it’s still your responsibility as the plan sponsor to make sure it’s filed completely and on time.
What Version of Form 5500 Does Your Plan Need?
There’s no one-size-fits-all when it comes to Form 5500. The version you file depends on your plan’s size and structure. Here's a breakdown:
Form 5500-EZ
Form 5500-EZ is the simplest option, meant for solo 401(k) plans—plans that only cover a business owner and possibly their spouse.
You only need to file if your solo plan’s assets exceed $250,000 at the end of the year. There is no filing requirement for solo plans with fewer assets.
Form 5500-SF (Short Form)
If your plan has fewer than 100 participants with a balance at the start of the year, you may be eligible to file a simplified version of the Form 5500 - called the Form 5500-SF (short form) - provided your plan meets a few conditions:
-
- 100% invested in assets with a readily determinable fair market value (like mutual funds).
- No employer stock or hard-to-value assets.
- The DOL’s small plan audit waiver requirements are met.
Form 5500 (Long Form)
If your plan has 100 or more participants with a balance at the beginning of the year, or it doesn’t qualify for the Form 5500-SF, you’ll need to file the full version of the Form 5500.
This version requires additional schedules and potentially an independent audit, depending on your plan’s size and structure. These additional requirements help ensure transparency for plans that manage significant assets or involve more complex investment structures.
|
Attachment |
Description |
Large Plans |
Small Plans |
|
Schedule A – Insurance Information |
Reports details about insurance contracts used by the plan (such as group annuities), including commissions paid. |
If insurance contracts |
If insurance contracts |
|
Schedule C – Service Provider Compensation |
Lists service providers who received $5,000+ in compensation and discloses whether that compensation was indirect (e.g., revenue sharing). |
Yes |
No |
|
Schedule D –Participating Plan Information |
Used when a plan participates in master trust investment accounts (MTIAs), 103-12 Investment Entities (103-12 IEs), common/collective trusts (CCTs), and/or pooled separate accounts (PSAs). |
If applicable |
If applicable |
|
Schedule G – Financial Schedules |
Reports things like defaulted loans, non-exempt transactions, or losses due to fraud. |
If applicable |
No |
|
Schedule H – Financial Information |
Provides a full financial snapshot of large plans, including assets, liabilities, and income. |
Yes |
No |
|
Schedule I – Financial Information |
A scaled-down version of Schedule H for small plans. |
No |
Yes |
|
Schedule R – Pension Plan Information |
Includes data on distributions, funding status, and required minimum distributions (RMDs). |
Yes |
Yes |
|
Independent Audit |
Provides an independent, third-party review of a retirement plan’s financial statements |
Yes |
Not required (if waiver applies) |
When Do You Need an Independent Audit?
Independent audits can be one of the most time-consuming and expensive parts of maintaining a 401(k) plan. If your plan has 100 or more participants with a balance at the beginning of the year, you must include an audit with your Form 5500 filing unless the 80-120 rule applies.
Audits must be conducted by a licensed CPA and can cost several thousand dollars. To avoid the audit requirement, some employers keep participant counts below the threshold by removing small account balances from terminated employees.
What’s the 80-120 Rule?
The 80-120 rule says that if your 401(k) plan has between 80 and 120 participants with a balance at the start of the plan year, you can file the same version of Form 5500 as you did the previous year—even if your participant count crosses the 100-participant audit threshold.
So, if your plan has, say, 110 participants this year but you filed as a small plan last year, the 80-120 rule lets you continue filing as a small plan—without triggering the audit requirement.
How Do You File Form 5500?
All Form 5500 filings—except the 5500-EZ in some cases—must be submitted electronically using the Department of Labor’s EFAST2 system. Here's how it breaks down:
What’s the Deadline for Filing?
The deadline is seven months after the end of your plan year. For calendar-year plans, that’s July 31.
Need more time? No problem—you can file IRS Form 5558 before the deadline to get an automatic 2.5-month extension (October 15 for a calendar plan).
What If You File Late?
Missing the deadline can be a costly mistake:
-
- IRS penalties: $250 per day, up to $150,000.
- DOL penalties: Often higher and assessed separately.
If you realize you’ve missed a deadline, act quickly. The Delinquent Filer Voluntary Compliance Program (DFVCP) may help reduce the financial sting, but you’ll need to file as soon as possible and pay a reduced penalty. The IRS will generally accept delinquent Form 5500 filings without applying separate penalties when an employer utilizes the DFVCP.
Don’t Let Form 5500 Catch You Off Guard!
Form 5500 isn’t just a formality—it’s a vital part of keeping your 401(k) plan compliant and transparent. Understanding your filing responsibilities, knowing which version of the form to use, and planning ahead for audits can save you stress and money.
Whether you’re a solo entrepreneur or managing a growing team, staying on top of these requirements is part of being a smart, responsible plan sponsor.
Still have questions? Contact your 401(k) provider. A good one will make the Form 5500 process simple, accurate, and stress-free.
