QUESTION: We understand that ERISA welfare plans generally must file Form 5500, but that some plans are exempt from this requirement. Could you summarize the exemptions?
ANSWER: You are correct that the plan administrator of each ERISA plan must file an annual report—the Form 5500—and that certain welfare plans are exempt from the filing requirement, depending on plan size, funding method, or plan type. Here is a summary:
Small Plan Exemption. An ERISA welfare plan covering fewer than 100 participants at the beginning of the plan year is exempt from the Form 5500 requirement if it is unfunded (including certain plans deemed unfunded under DOL Technical Release 92-01), fully insured, or a combination of the two. (Some additional conditions apply; for more information, see our Checkpoint Questions of the Week about the exemption’s application to insured plans and unfunded plans.) The small plan exemption does not apply to plans subject to the Form M-1 filing requirements (generally multiple employer welfare arrangements—MEWAs). Thus, a small welfare plan must file Form 5500 only if it is funded, does not satisfy the conditions for the unfunded or insured plan exemptions, or is subject to the Form M-1 requirements.
Large Plans Must File. If an ERISA welfare plan covers 100 or more participants at the beginning of the plan year, Form 5500 must be filed for that plan year. The plan’s funded or unfunded status does not affect the filing requirement; however, large unfunded plans (including those deemed unfunded under Technical Release 92-01) need not complete certain Form 5500 financial reporting elements such as Schedule H and the accountant’s opinion. Thus, a large plan must file the main body of Form 5500, and may need to include one or more associated schedules.
Counting Participants. The Form 5500 filing obligation applies on a plan-by-plan basis. Consequently, an employer must first determine how many separate plans it maintains (see our Checkpoint Question of the Week)—only then can the number of covered participants for each plan be determined. For this purpose, individuals become covered participants on the earlier of the date (1) participation begins; (2) they become eligible for a benefit; or (3) they make a plan contribution. Former employees receiving COBRA benefits are counted, but covered family members, such as spouses and children, are not.
Other Welfare Plan Exemptions. No Form 5500 filing is required for plans offering only certain specified benefits, regardless of the number of participants. Exempted plans include day-care centers, certain apprenticeship and training plans, certain employee organization (union) plans, and plans for a select group of management or highly compensated employees. And because Form 5500 is an ERISA requirement, no Form 5500 filing is required for non-ERISA plans such as church and governmental plans meeting applicable requirements.
For more information, see EBIA’s ERISA Compliance manual at Sections XXII.A (“Overview of Form 5500 Reporting Requirements”), XXII.B (“Important Form 5500 Exemptions for Small Unfunded and/or Insured Plans”), and XXII.C (“Other Important Form 5500 Exemptions). See also EBIA’s Self-Insured Health Plans manual at Section XXIX.B (“Annual Form 5500 Reporting”). You may also be interested in our upcoming webinar “Form 5500 for Health and Welfare Plans: Preparation and Filing” (live on 5/8/2019).
Contributing Editors: EBIA Staff.