Mastering Form 5500: A to Z
and everything in-between
William J. Hein, CPC, QPA, QKA
Senior Pension Consultant
Preferred Pension Planning Corp.
www.preferredpension.com
Denise L. Finney, CPA
Manager - Pension Services Group
Amper, Politziner & Mattia, P.C.
www.amper.com
Mastering Form 5500: A to Z
and everything in-between
Brief Outline:

Introduction

Form 5500 and related schedules

DOL Benefit Plan Audit Requirement

Questions & Answers
2
Form 5500

3
William J. Hein
Senior Pension Consultant
Preferred Pension Planning Corp.
Form 5500

Every benefit plan covered by ERISA must file annually,
with a few exceptions

ERISA

Form 5500 and required supplemental schedules

Determining number of participants

Due date

Changes to 2007 Form 5500

Penalties for not filing or filing late
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Form 5500 - ERISA

Employee Retirement Income Security Act of 1974

Gives the Department of Labor (“DOL”) and Internal
Revenue Service (“IRS”) authority to issue regulations for:
 Financial records
 Tax returns
 Annual reports
 Audits in accordance with Generally Accepted Auditing
Standards (“GAAS”)
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Form 5500

Who is involved in administering an Employee
Benefit Plan?

Required Plan Information

Supplemental Schedules

Who signs Form 5500
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Administration of Employee Benefit Plan’s (“EBP”)

Plan Sponsor – employer, if single-employer plan

Named Fiduciary – plan must designate one or more –usually an
officer or employee for single-employer plan

Plan Administrator – responsible for day-to-day operations and
operating plan in accordance with plan documents and applicable
laws

Trustee – authority to manage and/or control assets

Custodian – holds plan assets

Record Keeper – third-party administrator who provides record
keeping services – responsible for participant level data

Form 5500 Preparer

Plan Auditor
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Form 5500 Schedules

Schedule A – Insurance Information – If benefits provided by an
insurance co.

Schedule B – Actuarial Information – must be signed by actuary
enrolled in the Joint Board for the Enrollment of Actuaries

Schedule C – Service Provider Information – if the plan paid any
individual or company > $5000 for services (accounting,
auditing, brokerage, administrative fees, investment advisory
fees)

Schedule D – DFE/Participating Plan Information – if plan
participates or invests in a common collective trust (CCT),
pooled separate account (PSA), master trust (MT), or 103-12
Investment Entities (103-12 IE)
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Form 5500 Schedules

Schedule E – Employee Stock Ownership Plan (“ESOP”) Annual
Information

Schedule G – Financial Transaction Schedules – If plan has loans or
fixed income obligations in default or determined to be uncollectible,
leases in default or classified as uncollectible, or prohibited
transactions. If required, auditor must report on this schedule.

Schedule H – Financial Information for Large Plans – also required
supplemental schedules of:

Assets held at end of year

Assets acquired and disposed of during year

Reportable transactions – single transaction or series of
transactions purchased or disposed of that exceed 5% of plan
assets
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Form 5500 Schedules

Schedule I – Financial Information for Small Plans

Schedule R – Retirement Plan Information – reports
distributions, funding and amendments that increase the
value of the plan

Schedule SSA – Annual Registration Statement Identifying
Separated Participants with Deferred Vested Benefits

PBGC Form 1 – DB plans pay an annual premium and file
this form
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Form 5500
Who Signs Form 5500?
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Form 5500 - Determining the Number of Participants

Determined at beginning of plan year

Active participants – all eligible participants

Retirees or separated participants who are receiving
benefits (with account balances)

Retirees or separated participants who are entitled to
begin receiving benefits (with account balances)

Beneficiaries of deceased participants (with account
balances)
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Form 5500
Due
Date:
Form 5500 is due last day of 7th month after plan year-end.
May be extended up to 2 ½ month from original due date.
For calendar year plans, original due date is July 31 and the
extended due date is October 15
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Form 5500
Changes to 2007 Form 5500
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Form 5500

Penalties for not filing or filing late

Delinquent Filer Voluntary Compliance Program (“DFVCP”)
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DOL Benefit Plan Audit Requirements

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Denise L. Finney CPA
Manager – Pension Services Group
Amper, Politziner & Mattia
DOL Employee Benefit Plan Audit Requirements

What EBP’s require an audit?

Types of audits required by ERISA Section 103(a)(3)(A)

General components of an employee benefit plan audit

Contribution Timeliness Issues

Small Plan Audits (< 100 participants)

Changing 403(b) Plan requirements

Employee Benefit Plan Audit Quality Center
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DOL Employee Benefit Plan Audit Requirements

What types of EBP’s require an audit

Defined Contribution Plans

Defined Benefit Plans


Health and Welfare Plans funded through the Voluntary
Employee Beneficiary Association (“VEBA”) Trust
What size of EBP’s require an audit

An excess of 100 eligible participants at the beginning of a
plan year
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DOL Employee Benefit Plan Audit Requirements

Exemptions to requirement –


General rule - plans with < 100 participants
Plans electing to file as “small plan” under the 80-120
participant rule – for plans that each year fluctuate
around the 100 participant level – if plan has 80-120
participants in beginning of plan year, can file same
way it filed previous year
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DOL Employee Benefit Plan Audit Requirements

A plan sponsor’s fiduciary responsibility as required by
ERISA and scrutinized by the Department of Labor includes
having a prudent process for selecting service providers.

Generally, an audit is required by an independent CPA for
each plan with over 100 eligible participants at the
beginning of a plan year.

There are two levels of audits acceptable to the DOL.

Limited scope

Full scope
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DOL Employee Benefit Plan Audit Requirements (cont’d)

The type (limited or full) depends on where the assets are held.
Limited Scope - can be performed if held by:


Bank,

Trust company

Insurance company
Failure to supply acceptable audited financial statements is
considered failure to supply a complete Form 5500 and
substantial penalties apply (Generally $50,000).
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DOL Employee Benefit Plan Audit Requirements

Investments
 Limited scope/full scope procedures
 Certification

Participant Accounts
 Contributions, fund allocations, earnings allocations,
distributions, rollovers

Supplemental Schedules
 Non exempt transactions

Reviewing Form 5500
 No material inconsistencies
 Generally focus on Schedule H

Audit Report is filed along with the Annual Form 5500 filings
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Pitfalls of Investing Contributions

RULE #1:
KNOW DOL 29 CFR 2510.3-102



Employee deferrals must be contributed to the plan as
of the earliest date on which such contributions can
reasonably be segregated from the employer’s general
assets.
In no event shall the deposit occur later than the 15th
business day of the month following the month in which
the participant contribution amounts are
received/withheld by the employer.
Question on Form 5500.
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Pitfalls of Investing Contributions (cont’d)

This is a very sensitive area with the DOL.

Plan Sponsors must be made aware of its importance.

The DOL considers infractions to be prohibited transactions
and an extension of credit to the Plan Sponsor.
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Audits of Small Plans

Effective as of the first plan year beginning after April 17,
2001 (or effective January 1, 2002 for calendar year
plans), employee benefit plans with fewer than 100
participants at the beginning of a plan year are no longer
automatically exempt from the Department of Labor’s
annual audit requirement.
25
Audits of Small Plans (cont’d)

Generally, a two-part test applies. A plan must
meet both 1 AND 2 below, or an audit is required:
ONE:
Either
At least 95% of plan assets (measured at the end of
the prior plan year) are “qualifying plan assets”
Or
If less than 95% of plan assets are held in “qualifying
plan assets,” any person who “handles” assets is
covered by a fidelity bond (as defined).
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Audits of Small Plans (cont’d)
TWO:
Certain required disclosures are made in the plan’s
Summary Annual Report regarding names of institutions
holding assets, name of surety company issuing the bond
if more than 5% are non-qualifying assets and various
other notices to participants.
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Audits of Small Plans (cont’d)

Qualifying assets are basically
assets held at:
 Bank
 Insurance company
 Broker-dealer
 Trust company
 Mutual Fund Company
 Participant loans
 Qualifying employer securities
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
Non-qualifying assets
would include:

Hedge Funds

Real Estate

Art

Coin Collections

Antique Cars

etc.
DOL Employee Benefit Plan Audit Requirements

Changing 403(b) Plan Requirements


Plan document effective January 1, 2009
Audits required, same guidelines, for the 2009
Form 5500 filing
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Employee Benefit Plan Audit Quality Center (“EBPAQC”)

The EBPAQC was opened in March 2004

The purpose of the Center is to promote the quality of employee
benefit plan audits and serve as a comprehensive resource
provider and provide support for the performance of employee
benefit plan audits

There are approximately 1,500 member firms

Website: http://ebpaqc.aicpa.org/

Plan Sponsor Resources Page

Helpful no matter what the plan size

Can assist in finding a firm center member
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Questions?
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Contact Information
William J. Hein, CPC, QPA, QKA
Senior Pension Consultant
Preferred Pension Planning Corp.
991 Route 22 West
Bridgewater, NJ 08807-2956
(908) 575-7575 ext. 204
wjhein@preferredpension.com
www.preferredpension.com
Denise L. Finney, CPA
Manager - Pension Services Group
Amper, Politziner & Mattia, P.C.
750 Rt. 202, South
Suite 500
Bridgewater, NJ 08807
908-218-5002 ext. 269
finney@amper.com
www.amper.com
“The material contained in this
presentation is for general information
and should not be acted upon without
prior professional consultation.”
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