If you offer your employees an employer-sponsored retirement plan in the form of a 401k, a pension or another type of plan covered under ERISA, you’re coming up on your Form 5500 deadline. Unless you have a one-participant plan (either a sole proprietor or partnership plan) with total assets of $250,000 or less, filing the Form 5500 is a non-negotiable requirement to offer a 401k or similar plan. And it will likely require that you allocate resources (time, money and talent) to ensure it’s completed properly.

What is a Form 5500?

Form 5500 is a form issued by the Department of Labor (DOL) on which employers who offer 401ks and other ERISA-covered plans report on their plan’s performance, financial condition, operations and management. These results are then distributed to plan participants.

There are three types of Form 5500:

  1. The “Regular” Form 5500: If your plan has 100 or more participants, you’ll have to complete this version.
  2. The “Short” Form 5500: This version is for companies that have fewer than 100 participants in their plan. 
  3. The “One Participant” Form 5500: If your plan covers one participant and their spouse, and you’re required by ERISA rules to file a Form 5500, this is the version you will use. 

Why Do Employers Have to File a Form 5500?

The federal government uses Form 5500 in two ways. First, it helps to ensure that employer-sponsored plans are being operated and managed in a way that is in the best interest of the plan participants (i.e. the employer is fulfilling its fiduciary responsibilities). Second, the DOL, Congress and other federal agencies and private organizations use it to inform them on employee benefits, tax and economic trends and policies.

Form 5500 Deadline

Your deadline to file your Form 5500 is seven months after the end of the plan year. If your retirement plan operates on a calendar year, then your deadline is July 31st. Penalties for missing the deadline are $250 a day up to a maximum penalty of $150,000.

The Form 5500 is one of the many annual administrative duties employers must fulfill when they offer a 401k or similar type of retirement savings plan. But what if we told you there was another option that didn’t require filing a Form 5500, or any other form of documentation with the IRS or Department of Labor (unless you’re offering a plan to comply with a state mandate)? There is. It’s an Icon payroll deduction IRA.

Payroll Deduction IRA: The Simplest Way to Offer a Retirement Plan

Even the IRS will tell you that, “a payroll deduction IRA is probably the simplest retirement arrangement that a business can have.” This is why:

  • A business of any size (even the self-employed) can offer a payroll deduction IRA.
  • No plan documents are required (unlike the plan document you must maintain under a 401k arrangement).
  • The employer has no Form 5500 filing requirements, unless required by a state retirement mandate.
  • Employers’ only responsibilities are to approve the payroll deductions and provide employee information to plan administrators.
  • No statements need to be provided to employees.
  • Only employees make the contributions.
  • Employees’ contributions might be eligible for the Saver’s Credit.
  • Employees are always 100% vested.

How Icon Makes a Payroll Deduction IRA Even Better

Icon leverages technology to administer our plan so we can offer flat, transparent pricing. We handle all employee onboarding, communication and investment management. We offer customer support in real-time and provide employers with a streamlined dashboard for the minimal tasks they need to perform and employees with an app for easy plan management.

If you’re ready to offer your employees a retirement savings plan that requires few of your precious resources, let’s chat! We can get you set up in minutes.

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