To help taxpayers, the Department of Treasury and the Internal Revenue Service (IRS) issued Notice 2020-23 to provide additional key tax filing deadlines. The notice included significant relief for individual taxpayers and businesses needing extra time to file required tax forms. Unsurprisingly, the notice does not include filing relief for retirement plan 5500s, as the Form 5500 has long had filing relief through IRS Form 5558. For example, with Form 5558, a December year-end plan can already extend their July 31st filing deadline to October 15th.

With the 5500 filing season upon us, we’ve answered some frequently asked questions and listed resources to help you navigate your company’s filing.

Which employers must file a Form 5500? 

Employers who sponsor a qualified retirement plan with one or more qualified plan participant. Additionally, employers with retirement plans that cover 100+ plan participants (as of the first day of the plan year) must also include an independent auditor’s financial statement with their 5500 filing.  Though there is an available grace period to defer the independent 401(k) audit requirement for an employer that crosses the 100+ participants threshold for the first time.

Who are plan participants? 

Participants are employees that are enrolled in the plan (active), can enroll in the plan (eligible), and terminated employees with active account balances. The 5500’s Summary Annual Report (SAR) disclosure requirements apply to all aforementioned participants.  

Is there a penalty for filing Form 5500 past the deadline? 

Late filed returns are subject to penalties from both the IRS and Department of Labor (DOL).

  • The IRS penalty for late filing is $25 per day, up to a maximum of $15,000.
  • The DOL penalty for late filing can run up to $1,100 per day, with no maximum.

Additional Resources 

Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC). Pensionmark Financial Group, LLC/Pensionmark Securities, LLC and Sequoia Consulting Group are non-affiliated entities.

Danelle Saucier, QPA, QKA, QPFC – Danelle is the retirement compliance liaison for Sequoia, where she works with our teams and clients to optimize and streamline administration, servicing, and compliance. In her free time, Danelle enjoys having outdoor adventures, seeking out new knowledge, and playing with her daughter and animals.