As an employer, if you offer any type health and welfare benefit and you have more than 100 employees receiving those benefits, you may be required to file Form 5500, the Annual Return/Report of Employee Benefit Plans with the Department of Labor (DOL)/ Internal Revenue Service (IRS)

 

A couple of examples of health and welfare benefits would include health insurance and group term life insurance, but there are many other employee benefits that require annual reporting on Form 5500.

 

This is a good time to review all the employee benefits you offer your employees and determine which benefits require reporting and whether or not the Form 5500 is timely filed because the DOL now has EFAST2, the mandatory electronic filing system. EFAST2 can identify any large employers that file returns for their retirement plans (401(k)) and whether or not any health and welfare benefit plans are being filed also.

 

The DOL is simply sending letters of inquiry to those identified companies and if there is either no response or the response is questionable an examination is automatically opened.

 

If you have failed to file accurate or complete Forms 5500(s) timely, in addition to the assessment of severe penalties, the penalty relief available through the Delinquent Filer Voluntary Compliance Program (DFVCP) is closed to you.

 

The DOL can penalize you up to $1,100 per day for failure to file Form 5500 for health and welfare benefit programs.

 

The DFVCP is available to plan administrators who have not been notified in writing by the DOL of a failure to file a timely annual report. Participation in the DFVCP is a 2 part process. First, the Form 5500(s) is electronically filed and secondly the penalty payment is remitted using the DOL calculator. The penalty structure can be calculated daily at $10 day; by a “per filing” method with a maximum of $2,000 for large plans or by a “per plan” method with a maximum of $4,000 regardless of the number of late reports filed at the same time.

 

The JMF Pension team is available to consult with you about the filing requirements; ERISA benefits that are subject to reporting and/or preparation of any Form 5500s not previously timely filed.