ERISA Reporting Requirements -

ERISA reporting requirements, as well as other retirement plan reporting requirements, can be daunting for plan sponsors and administrators new to the process. This article is an introduction to those requirements and responsibilities.

Form 5500

ERISA and the Code require each retirement plan to file Form 5500 by the end of the seventh month after the end of each plan year (extensions of time are available) unless the DOL and the IRS have granted an exemption to this requirement. Under the IRS’s regulations, certain retirement plans are not required to file a Form 5500 (e.g., if the plan covers only the sole owner or owners of the employer and has less than $250,000 in assets at the end of the year). If a Form 5500 is required and the plan is funded through a trust, formal plan financial reports and an independent qualified public accountant’s opinion may be required.

The failure to file a Form 5500 required by ERISA can result in a penalty imposed by the DOL of up to $2,670 per day with no maximum unless the penalty is excused based upon reasonable cause. That penalty is the 2024 number and will be adjusted for inflation. Late filers may obtain relief from these penalties under the DOL’s Delinquent Filer Voluntary Compliance (DFVC) Program under which late forms can be filed subject to a fixed penalty schedule that is less onerous than the penalties that might otherwise apply.

There is a separate late penalty due to the IRS for failure to file a Form 5500 required by the Code. The IRS may also impose penalties under the Code for the failure to file a Form 5500 of $250 per day with a maximum of $150,000 per Form 5500.

Summary Annual Report (SAR)

Each year, the plan administrator of a plan that is not exempt from filing a Form 5500 must provide a summary annual report (SAR) to the participants and beneficiaries receiving benefits under the plan within nine months after the end of the plan year. The SAR summarizes the information provided on the Form 5500 and tells the participants how to obtain a copy of the annual return/report. The requirements for a SAR are set forth in the DOL’s regulations.

Summary Plan Description

ERISA requires that every plan be summarized in lay terms in a summary plan description (SPD). The specific requirements for the contents of an SPD are contained in regulations published by the DOL. The SPD must be provided to each participant in the plan and beneficiaries receiving benefits under the plan within 90 days after he or she becomes a participant. A copy of the SPD need not be sent to the DOL unless the DOL requests a copy. If a subsequent amendment to the plan results in a change in any of the information required to be in the SPD, a supplement to the SPD must be distributed to all participants within 210 days after the end of the plan year in which the change was adopted. If the plan has been amended, an SPD incorporating all amendments to the plan must be provided to the participants every 5 years. If the plan has not been amended, another copy of the SPD must be provided to the participants every 10 years.

The willful violation of the requirement to provide SPDs, SARs and certain other information requested by participants to the participants can result in a fine of up to $100,000, imprisonment for up to 1 year, or both if the person convicted is an individual. If the person convicted is not an individual (e.g., it is a corporation), the fine can be as high as $500,000. In addition, the failure to provide certain information requested by a participant or beneficiary within 30 days after a request can result in a civil penalty of up to $110 per day. This amount is payable to the participant or beneficiary involved.

Determination Letters

In addition, the following filings are optional, but generally recommended:

A Form 5300 series application may be filed with the IRS for a favorable letter of determination on the plan’s documents. Although not required, such a filing is advisable because you can receive confirmation from the IRS that your plan documents are in compliance with the applicable law.
A Form 5310 may be filed as part of an application for determination from the IRS concerning the termination of a plan (the failure to get such approval may increase the likelihood of an audit by the IRS).

Reporting To The PBGC

If a defined benefit pension plan is subject to PBGC reporting, it is required to file PBGC Form-1 on an annual basis and pay an appropriate PBGC premium along with such filing. In addition, if the plan encounters funding problems, a report must be filed with the PBGC. It may also be necessary to notify the PBGC when certain “reportable events” happen with respect to your defined benefit plan. If a plan is subject to the jurisdiction of the PBGC, the plan must notify the PBGC before the plan can be terminated.