Speaker: When Filing Form 5500, Don't Forget Welfare Plans
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For many clients who have never filed a Form 5500 for their health and welfare plans, this can all seem quite new and quite intimidating. Some never even knew they needed to file in the first place. However, Neumark said that the there are remedies for that in the form of the Delinquent Filer Voluntary Compliance program.
"One of the questions that come up is, 'I've never filed a 5500 for my welfare plans since the beginning of time. How far back do I have to file under the delinquent program?' That is a question we've posed to the chief accountant's office, and they're tolerant," he said.
Delinquent filers, he said, don't have to go back to all years they failed to file. The DOL generally is fine with just the past three, though he's seen some cases go back five or six years. Still, he said that the program is very forgiving even in these cases.
"If you come clean and you've gone back a few years and started now doing it on a regular basis, I think you're good," he said.
And if not? Neumark noted that employee benefit plans are overseen by three different regulators: the IRS, the DOL and the Pension Benefit Guaranty Corporation, all of which are capable of leveling their own penalties regardless of whatever the other two are doing.
"We have a lot of penalties in this area, and it scares everyone! We have the IRS penalties! We have the DOL penalties! And other penalties! You have loads of penalties and if you read the statutes and put them together, you'll go broke!" he said.
Neumark also went over common red flags in Form 5500 filings that are especially noticeable. He said regulators look for inconsistencies, blank spaces ("don't just leave it blank because you don't want to say yes and don't want to say no!"), large amounts of unusual assets, large drops in plan participants and unusual numbers of loans.
"One of the questions that come up is, 'I've never filed a 5500 for my welfare plans since the beginning of time. How far back do I have to file under the delinquent program?' That is a question we've posed to the chief accountant's office, and they're tolerant," he said.
Delinquent filers, he said, don't have to go back to all years they failed to file. The DOL generally is fine with just the past three, though he's seen some cases go back five or six years. Still, he said that the program is very forgiving even in these cases.
"If you come clean and you've gone back a few years and started now doing it on a regular basis, I think you're good," he said.
And if not? Neumark noted that employee benefit plans are overseen by three different regulators: the IRS, the DOL and the Pension Benefit Guaranty Corporation, all of which are capable of leveling their own penalties regardless of whatever the other two are doing.
"We have a lot of penalties in this area, and it scares everyone! We have the IRS penalties! We have the DOL penalties! And other penalties! You have loads of penalties and if you read the statutes and put them together, you'll go broke!" he said.
Neumark also went over common red flags in Form 5500 filings that are especially noticeable. He said regulators look for inconsistencies, blank spaces ("don't just leave it blank because you don't want to say yes and don't want to say no!"), large amounts of unusual assets, large drops in plan participants and unusual numbers of loans.