If your industry is growing at a fast rate, then as a business owner you’d want to hire and retain employees. It’s likely you’ll be looking for compelling methods to achieve this. For others, there is profit sharing and 401(k), and these support your employees to build their career within your company.
Implementing this is great for the workforce, but it comes with a labor law complaint form that will make things complicated. This is the Form 5500.
First off, let’s define Form 5500
The Form 5500 isn’t just one, but a series that is under the Employee Retirement Income Security Act (ERISA) legislated in 1974. It serves as the primary source of information about the funding, operation, investments, and assets of employee benefit plans for the U.S. Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. In essence, Form 5500 provides an important assessment of employee benefits, tax, and even economics trends & policies.
With that being said, it’s important to keep pace with changes in legal policies regarding employee benefits. As an employer, it’s advisable to pay close attention to Form 5500 when it comes to pension or even welfare plans for your employees. Here are the foremost considerations to keep in mind when doing so:
Requirements
Form 5500 is required for any pension or welfare plan under ERISA. For plans with fewer than 100 participants, a short form is provided. These forms must be filed using EFAST2-approved software or EFAST IFILE. Here’s the Department of Labor’s introductory page about EFAST2.
Information
To complete Form 5500, you have to include a lot of information. Namely, your financial schedule (assets and liabilities), insurance contract, service provider, retirement plan, financial transactions, actuarial details, and an accounting report.
Timing
Usually, the due date for submission is the last day of the 7th month after the plan year ends. This is July 31 for all calendar year plans. If the day is on a weekend or a federal holiday, the due date will be moved to the following business day. If you need extension, you can request so using Form 5558.
Keeping compliance with Form 5500 ensures a healthy working relationship with employees, because it provides a strong employee benefit.
While preparing these can be elaborate, there are professional businesses like Prenger & Profitt that you can partner with, to ensure you stay compliant no matter which form you are required to file.
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