The Form 5500 is an ERISA requirement for retirement plans to report and disclose operating procedures. Advisors use this 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 aware of red flags that the IRS and DOL look for on Form 5500 filings:
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, non-exhaustive list of common Form 5500 red flags. If you’re concerned about ERISA compliance, contact your advisor sooner, rather than later.
ACR# 348956 5/20
Plexus Financial Services, LLC (“PFS”) does not provide specific investment, tax, and/or legal advice and the information referenced/provided is not specific to any company’s or individual’s circumstances. These materials are general in nature and provided for educational purposes based upon publicly available information from sources believed to be reputable and reliable; we cannot assure the accuracy or completeness of these materials and as a result, personal diligence should be completed before relying or acting upon the information presented. Any general information referenced/provided is not be construed as personalized investment, tax, and/or legal advice. Always consult an advisor, attorney and/or tax professional regarding your specific situation.
This communication is strictly intended for individuals residing in the states of Alabama, Arkansas, Colorado, Georgia, Illinois, Indiana, Louisiana, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Texas, Washington, and Wisconsin and does not provide any information regarding any offers or services directly provided by PFS. The information referenced/provided is not to be considered an offer to buy or sell, or a solicitation of any offer.
You may request receipt of PFS’s Form ADV, Privacy Policy Statement, Code of Ethical Behavior, and/or Conflict of interest Policy at any time by written request to communications@plexusfs.com. For additional details or questions regarding this or any information provided by or related to PFS please visit our website at www.plexusfs.com located at 21805 Field Parkway, Suite 320, Deer Park, Illinois 60010. To contact us by phone please call (847) 307-6222.
PFS is a wholly owned subsidiary of The Plexus Groupe LLC. Advisory services are offered through Plexus Financial Services LLC, a registered investment advisor with the SEC which transacts business in states where it is properly registered, or is excluded or exempted from registration requirements, member FINRA www.finra.com, and the SIPC www.sipc.com. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.
Retirement Plan Advisory Group (“RPAG”) is not in the business of providing legal advice with respect to ERISA or any other applicable law. The materials and information do not constitute, and should not be relied upon as, legal advice. The materials are general in nature and intended for informational purposes only. All content, including any brochures or other materials designed for potential use with plan sponsors, fiduciaries, and plan participants, must be reviewed and approved by the compliance and legal department(s) of the financial professional and/or firm prior to any use to confirm that they meet the firm’s legal and compliance policies and standards. The financial professional and his/her firm are solely responsible for the use of content and any materials included herein, and for ensuring that all services provided by the financial professional conform to the firm’s legal and compliance policies and standards.