ERISA RESOURCES
ALL ABOUT ERISA
Form 5500 Education
The Form 5500 is an integral document for organizations that sponsor employee benefit plans subject to ERISA. The primary purpose of Form 5500 is to satisfy annual reporting requirements under Title I and Title IV of The Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. By completing and filing the correct version of Form 5500, organizations provide the government with key details about their plan’s financial condition, investments, and operations, ensuring that employee contributions and investments remain protected.
There are three variation of the Form to note:
- Form 5500 :: Applies to most public and private businesses providing a retirement plan to 100 or more participants with a balance in the plan (referred to as a Large Plan Filing.) This form must be filed electronically using the DOL ERISA Filing Acceptance System (EFAST2). Large Plan Filing plans are also required by the IRS to have an outside auditing firm audit the plan for the plan year that is being reported. These audits come at an additional cost to the employer sponsoring the plan. Employers can hire an auditor of their choosing.
- Form 5500-SF :: A shortened version of the Form 55500 that applies to companies that sponsor plans with fewer than 100 participants with a balance in the plan (referred to as a Small Plan Filing.) This version must be filed electronically using the EFAST2 system. Small Plan filings are exempt from the audit requirement do not need to secure an auditor.
- Form 5500-EZ :: This version is required for one-participant plans that cover a business owner and a spouse (but no other employees). Those who do have to file Form 5500-EZ can do so either electronically or by mail. (Note: If the total plan assets are $250,000 or less, filing is not necessary.)
While ADMIN Partners supports Plan Sponsors in the filing of the Form 5500, the Employer is ultimately responsible for the filing. Therefore, Employers who do not provide ADMIN Partners the necessary data and signatures may face fines that will be levied by the DOL and IRS should the deadline for filing be missed. (Note: If more time is needed to prepare and submit the Form 5500 on the filing due date, an extension can be filed to push the filing due date out 2 ½ months out. ADMIN Partners does charge an additional fee for filing extensions.)
12/31 Plan Year-End Date = 7/31
9/30 Plan Year-End Date = 4/30
8/31 Plan Year-End Date = 3/31
7/31 Plan Year-End Date = 2/28
6/30 Plan Year-End Date = 1/31
12/31 Plan Year-End Date = 10/15
9/30 Plan Year-End Date = 7/15
8/31 Plan Year-End Date = 6/15
7/31 Plan Year-End Date = 5/15
6/30 Plan Year-End Date = 4/15
ADMIN's Year-End Calendar
Our year-end calendar allows you to view the milestones that are to be met during the Year-End process. These milestones are timeframes of when ADMIN Partners will request materials that we need from the employer to complete filings and testing, and also the due dates of those filings to the DOL and the IRS.
ALL ABOUT ERISA
ERISA Bond Converage
The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), generally requires every “fiduciary” of a plan to obtain an ERISA fidelity bond to protect the plan from losses due to fraud or dishonesty (e.g., theft) by persons who handle plan funds.
In general, a fiduciary of a plan is any person who exercises any discretionary authority or control with regard to the management, administration or investments of such plan and the amount of the bond shall be no less than ten (10) percent of a plan’s assets at the beginning of a plan year, provided that the amount of the bond must not be less than $1,000 nor more than $500,000. However, as you may be aware, different rules apply with respect to the amount of the bond with regard to “small” retirement plans.
A small retirement plan is a plan that covers less than 100 participants at the beginning of any plan year and a small plan is exempt from the “audit” requirement associated with the annual filing of Form 5500. However, DOL rules impose an additional “bonding” requirement on small retirement plans in order to retain the audit exemption. If the value of the plan assets which are invested in “non-qualified” assets (e.g., amounts not invested in investment company, insurance company or bank accounts) exceeds five percent of the total value of the assets of the small plan at issue, the amount of the bond in relation to such plan must be at least the value of such non- qualified assets. However, in no event may the amount of the bond be less than the percentage or dollar limitations imposed by the “ten percent” rule discussed above. As mentioned above, if the “non-qualified asset bonding” rule is not satisfied, a plan administrator is required to attach an accountant’s audit to the annual Form 5500.
Regardless of whether your plan is a small plan or a large plan, due to the above-referenced rules, the plan fiduciaries of your plan are required to obtain a fidelity bond in order to comply with ERISA. On the required annual Form 5500 filing, you are asked to provide the status of your ERISA fidelity bond coverage.
Obtaining the ERISA fidelity bond is the sole responsibility of the employer. A retirement plan under ERISA is required to secure the ERISA fidelity bond coverage. If you have a business insurance provider, they may be able to assist you in obtaining fidelity bond coverage. You can also refer to the Department of Treasury’s Listing of Approved Sureties, Department Circular 570. CLICK HERE to access the website.
Please note that if your plan is classified as a one-person plan; you are not required to acquire a fidelity bond.
QUESTIONS ABOUT ERISA?
CONNECT WITH OUR ERISA EXPERTS TODAY!
You can reach our Plan Administration team via email at planadministration@youradminpartners.com or by phone at 877-484-4400.
ALL ABOUT ERISA
Safe Harbor 403(b)
The main requirement for a traditional Safe Harbor 403(b) is that the employer must make contributions, and those contributions must vest immediately. Contributions can take three different forms, the first two of which are matching, which means employees must defer funds to their accounts in order to receive contributions. The third option requires your company to make a contribution, even if employees don’t defer any of their income into their plan.
Here are some examples of different contribution formulas:
Basic matching: The company matches 100% of all employee 403(b) contributions, up to 3% of their compensation, plus a 50% match of the next 2% of their compensation.
Enhanced Matching: The company matches at least 100% of all employee 403(b) contributions, up to 4% of their compensation (not to exceed 6% of compensation).
Non-Elective Contribution: The company contributes at least 3% of each employee’s compensation, regardless of whether employees make contributions.
Below is a chart displaying a sample of the matching and nonelective contributions for for an employee under the three different Safe Harbor formulas. In the example below, the employee is earning $150,000 of eligible compensation during the year.
ERISA MATERIALS
Want to access these ERISA resources outside our website? Use the links below to download ADMIN’s ERISA resources in print and email friendly formats.
ALL ABOUT ERISA
Use this piece to better understand ERISA and the resopnsibilities that come with it.
ERISA BOND COVERAGE
Use this piece to learn more about the ERISA Bond Coverage requirement.
I STILL HAVE A FEW QUESTIONS
Frequently Asked Questions
What is ERISA?
The Employee Retirement Income Security Act of 1974 (ERISA) was established to protect retirement plan participants as well the investments that they contribute to their employer-sponsored retirement plan. This federal law was constructed to safeguard the interests of participants and beneficiaries by requiring the disclosure of all features & funding within the plan.
What responsibilities come with ERISA?
Plans that are subject to ERISA hold annual obligations that are required in order to remain compliant. These requirements include the filing of a Form 5500 (along with additional schedules based on the scope of the plan) as well as nondiscrimination testing which ensures the plan does not discriminate against non-highly compensated employees. Depending on the size of the plan, the Employer may also be required to have a formal audit conducted by a third party firm. As a leading TPA, ADMIN Partners supports our ERISA clients with these Plan obligations to ensure their annual requirements are completed and their Plan remains in compliance.
What do the ERISA responsibilities include?
Year-end testing responsibilites for ERISA Plans include:
- Census and Financial Data Collection
- 415 Limit, 402(g) Limit and Non-Discrimination Testing
- Form 5500 Filing
- Form 8955-SSA Filing (if applicable)
- Annual Plan Audit (Large Plans Only)
- Summary Annual Reporting
- Universal Availability
- 408(b)2 Disclosures
To better understand the roles, responsible parties, and deadlines based on your Plan’s year-end date, CLICK HERE.
What subjects a Plan to ERISA?
While there are some 403(b) plans that are statutorily exempt from the rules and regulations of ERISA (public education, government, and most church plans), there are many plans who can become an ERISA Plan based on the following factors:
- Plans that are sponsored by private tax-exempt employers, and make decisions on behalf of the plan (vesting, employee exclusions, etc…) or receive compensation for performing administration.
- Retirement plans that opt to contribute an employer match as an added benefit to the participants of the plan.
- Employers that use a group arrangement for participant investments versus individual contracts.
What is the timeline for year-end testing?
Year-end services are performed in phases based on the Plan’s year-end date. (While most Employers utilize the calendar year, 12/31, some opt to use their fiscal year and the Plan year.) Based on the Plan’s year-end date, ADMIN’s Plan Administration team will reach out to start the year-end process by collecting annual census data from the Employer and annual financial reporting from the investment provider(s). From there, Employers will work alongside ADMIN’s Plan Administration team to complete the necessary requirements for year-end testing and Form 5500 filing. CLICK HERE to view ADMIN’s year-end calendar.
How does ADMIN support ERISA clients?
ADMIN has a team dedicated to the plan administration of our ERISA clients. This includes annual year-end testing and 5500 filing. To learn more about our ERISA services, CICK HERE.
Stay Connected With ADMIN Partners
Subscribe to the ADMIN Newsletter: The ADMIN (b)rief where we put our knowledge at your fingertips!