Skip to content

Find resources to help with recovery if you’ve been impacted by Hurricane Helene. Learn More

Retirement

Be mindful of IRS and DOL Form 5500 red flags

The Baldwin Group
|
Updated: September 19, 2024
|
2 minute read

The Form 5500 is an ERISA requirement for retirement plans to report and disclose operating procedures. Advisors use the filing  to confirm that plans are managed according to ERISA standards. The form also allows individuals access to information, protecting the rights and benefits of the plan participants and beneficiaries covered under the plan.

Make sure you are compliant. Be mindful of potential red flags that the IRS and DOL look for on Form 5500 filings, such as:

  1. Not making participant deferral remittances “as soon as administratively possible” is considered a fiduciary breach and can make the plan subject to penalties and potentially disqualification. Delinquent remittances are considered to be loans of plan assets to the sponsoring company.
  2. An ERISA fidelity bond (not to be confused with fiduciary insurance) is a requirement. This bond protects participant assets from being mishandled, and every person who may handle plan assets or deferrals must be covered.
  3. Loans in default for participants not continuing loan repayments, or loans that are 90 days in arrears, are a fiduciary breach that can make the plan subject to penalties and disqualification.
  4. Corrective distributions, return of excess deferrals, and excess contributions, along with any gains attributed, must be distributed in a timely manner (typically two and a half months after the plan year ends). In some cases, these fiduciary breaches can be self-corrected if done within the same plan year in which they occurred and may be considered additional breaches if they extend beyond the current plan year.

This is a partial, not exhaustive list of common Form 5500 potential red flags. If you’re concerned about ERISA compliance, contact your advisor sooner, rather than later.

For more background about Plan Administration and Compliance including Form 5500, visit the DOL Employee Benefits Security Administration online. https://www.dol.gov/

This communication is for informational purposes only and does not purport to be a complete statement of all material facts related to any regulation, company, industry or security mentioned. The information provided while not guaranteed to accuracy or completeness has been obtained from sources believed to be reliable. The opinions expressed reflect our judgment now and are subject to change without notice and may or may not be updated. FSC.2024.58

This page includes links to external websites over which The Baldwin Group has no control.  By selecting the links, you are redirected to third-party websites, not under our supervision, who have different privacy policies than our Firm.  The Baldwin Group provides no warranties as to the content or accessibility of the website and assumes no liability for errors or reporting inaccuracies reflected therein.  We neither approve nor endorse the statements made by the site.  The Baldwin Group  accepts no responsibility for any loss or damage arising in any way from any hyperlink. FSC.2024.63

FSC.2024.61


Related Insights

Stay in the know

Our experts monitor your industry and global events to provide meaningful insights and help break down what you need to know, potential impacts, and how you should respond.

Real Estate
2024 State of the Market Executive Summary
Real Estate State of the Market Introduction In 2024, the real estate industry and insurance market continue to navigate a...
Real Estate
Real Estate Risk Management: Strategies to Protect Your Investments
Real Estate Risk Mitigation & Market Fluctuations Whether you own, manage, invest, or lend on real estate, in today’s fiercely...
Construction
4 Key Options for Construction Liability Insurance
One of the most frequent questions we receive is “What are my options for construction liability insurance for our development...
Retirement
Passing Your Pension to Heirs
Employees who will be receiving a pension at retirement have a difficult decision to make about how to pass their...
Retirement
Pay Plan Expenses with Plan Assets – How and When
Some retirement plan expenses can be paid for with plan assets — but many can’t. Which are the “reasonable and...
Let's make it possible

Partner with us to build solutions that align with your business, individual, or employee needs and open new possibilities for your future.

Connect with us