The requirement to file audited financial statements with your benefit plan’s Form 5500 depends on whether your plan is considered a large or a small depositor, which is determined by the number of participants in your plan at the start of the plan. year of the plan. The participants in your plan are:
- All employees who have met the eligibility requirements of the plan, even those who choose not to participate; and
- All terminated participants (retired, separated, deceased) who still have account balances.
In general, plans with more than 100 members at the start of the plan year are considered large plan depositors and are required to file a Form 5500 each year with the United States Department of Labor (DOL) along with the audited financial statements. of the plan as an attachment. Plans with fewer than 100 members at the start of the plan year are considered small plan depositors and can instead file Form 5500-SF (short form), which requires much less information about the plan and does not require that audited financial statements be attached to the file. .
However, due to the frequent fluctuation between just over or under 100 participants, the DOL has an “80/120 rule”. This rule allows a plan with more than 80 members, but less than 120 members, at the start of the current plan year, to use the same form as the previous year. The table below illustrates the circumstances under which the plan would be filed in each category.
The 80-120 member rule may allow some plans that would otherwise be required to meet the onerous large plan filing requirements for Form 5500 to continue filing through the streamlined Form 5500-SF process. It’s also important that you understand the 80/120 rule to ensure you file accurately with the DOL and avoid potential fines and penalties.
Benjamin A. Sumner, CPA, is an audit partner with over nine years of experience providing auditing, accounting and consulting services to a wide variety of private companies. For more information on this topic, you can contact Ben at (315) 472-9127 or [email protected] To learn more about Dannible & McKee, visit www.dmcpas.com.