Essential Form 5500 Filing Guidance for 401(k) Plan Sponsors


The IRS 2020 Form 5500 filing deadline is less than two months away for employers sponsoring 401(k) plans whose year ends on December 31. Most sponsors rely on a Third Party Administrator to prepare their Forms, but it is the sponsor’s responsibility to assure the forms are completed accurately and filed on time.


It’s important to understand that the signer of the Form 5500 is considered a plan fiduciary who has potential personal liability for the compliant administration of the 401(k) plan. This includes being responsible for the accuracy of the information contained on the Form 5500. Accuracy is important not only because it’s part of operating compliantly but because errors on the Form 5500 can raise a red flag for the IRS or the Department of Labor and trigger an audit.


Each year the Department of Labor publishes a guide to assist employers in filing the Form 5500. The 2020 Instructions for Form 5500 may be accessed on the site.


Which Form to File

In general, plans with fewer than 100 participants file Form 5500-SF. Those with more than 100 participants file Form 5500 and various schedules, depending upon their plan make-up. Two commonly required schedules include Schedule C, which identifies service providers receiving $5,000 or more in compensation, and Schedule H, which presents financial information about the plan. Other schedules can be necessary.


When to File

Forms 5500 must be filed seven months after the conclusion of the plan year. For plans with a December 31 year-end, the filing deadline is July 31. However, plans may file for an extension by completing Form 5558, which extends the filing deadline by two and half months. That’s October 15 for a plan with a December 31 year-end. Late filing can result in penalties from both the IRS ($250 per day) and the DOL ($1,100 per day).


How to File

Forms 5500 must be filed electronically under the ERISA Filing Acceptance System (EFAST2). Instructions are provided at The site permits sponsors not previously registered to do so and helps previous electric filers locate their PIN, which is necessary for filings.


Reviewing the Form 5500 before Filing

  1. Review the Form 5500 as though it is the first time you see it. Check each number – including your EIN and plan number – for accuracy. Do not rely on a previous form!
  2. Make sure the time period covered is not more than 12 months. Also check last year’s form to make sure there is no gap between the two documents; the beginning date of this year’s form should be the day after the final date of last year’s form.
  3. Choose a business code from those in the section marked “Codes for Principal Business Activity” in the 2020 Instructions. It is okay if this year’s code is different from the one used in a previous year.
  4. Ensure your Form 5500 distinguishes and tallies participants who are active, have balances and are terminated. Review the IRS definitions for each in the 2020 Instructions. Remember that the IRS defines an active participant as any participant who was eligible to contribute during the plan year, whether they did so.
  5. Make sure the plan characteristic codes listed on the form accurately describe your plan’s operations. For example, if you select 2F to indicate you intend to operate under ERISA Section 404(c) – and thus eliminate your potential liability for participants’ investment selections – then you must make sure you provide participants notice of your intention and the necessary materials that will allow them to make an informed investment selection.
  6. Confirm you have fidelity/ERISA bond coverage, answering YES to the question, “Was this plan covered by a fidelity bond?” A frequent error is to answer this question NO even when a plan is protected because the question asking for verification of coverage is listed among other questions to which the compliant answer is NO.
  7. Understand the amount required of the plan’s fidelity/ERISA bond. It must be 10 percent of plan assets as of the first day of the plan year for which the Form 5500 is filed or $500,000, whichever is less. If there is company stock offered in the 401(k) plan, then the maximum bond requirement increases from $500,000 to $1 million.
  8. Make sure all schedules and attachments correctly reference the name of the plan, EIN, plan number and so forth.
  9. If you terminate a plan, remember to file a Form 5500 for the plan.
  10. If a Third Party Administrator is not submitting the Form 5500 for you, make sure you have completed the electronic signature process before filing the Form 5500. Failure to sign can result in a “processing stopped” error message.
  11. Retain an original copy of the Form 5500 with all required signatures and dates for your 401(k) compliance folder.


This blog is written to help make the lives of plan sponsors easier in the process of meeting legal requirements under ERISA and improving their defined contribution plans. Please understand that reading this blog should not alone take the place of a one-on-one consultation regarding the needs of your specific plan and hence cannot be a guarantee against fiduciary breaches.

Laurie Wieder is Vice President – Institutional Retirement Plan Specialist with Alliant Wealth Advisors. She consults with 401(k) plan sponsors on retirement plan best practices, particularly in the areas of strategic plan design, plan management and compliance. She backs her expertise as a retirement plan specialist with more than 30 years of experience as a consultant, business owner and organization executive.