June 20, 2024 • 22 mins
If your business or organization offers pension or welfare benefit plans, you’ll want to listen to this episode that explains Form 5500 in detail, in addition to filing requirements and the hefty penalties for incorrect or late submissions.
Ann Myers and Alan Perka from the 5500 tax Group join us to help explain the details and filing of this form, Today on small business talks.
For additional details on Form 5500. You can Contact The 5500 Tax Group thriough their website address listed below.
Website: https://5500tax.com/
Don't foget to visit The Small Business Talks Blog and Subscribe to Our Channel.
We are always wanting to hear from our listeners and encourage you to send us your comments and suggestions to us via email at: nealr@mfgpa.org.
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Episode Transcript
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(00:00):
What is Form 5,500?
If your business or organization offerspension or welfare benefit plans,
you'll want to listen to this episodethat explains the importance of the form,
filing requirements,and the hefty penalties
for incorrect or late submissions.
Anne Myers and Alan Perka from the 5,500 Tax Group join us to help explain
(00:21):
the details and filing of this formtoday on Small Business Talks.
The Welfare Plan Form 5,500 is a compliance and disclosure
document that employers must filewith the Department of Labor
and the Internal Revenue Servicefor pension or welfare benefit plans
(00:45):
covered by the EmployeeRetirement Income Security Act.
The purpose of Form 5,500 is to providethe IRS and DOL with the information
about the plan's operation and compliancewith government regulations.
It's important for you understand whatWelfare Plan Form 55 Compliance
is all about.
To help us better understand,we have Anne Myers, partner,
(01:09):
and Alan Perka, Senior Managerfrom the 5,500 Tax Group with us today.
Welcome to the program.Thank you.
How are you doing this morning?Doing well.
I don't know how good my introductionwas to the topic, so I'm going to ask if
you could just give us a brief overviewas to what is Form 5,500 and what does it
(01:29):
have to do with welfare plans?
Yeah, I think you did a pretty good jobintroducing what the form is, but I'll go
into a little bit more detail.
The Department of Labor, theInternal Revenue Service, and the Pension
Benefit Guarantee Corporation I jointlydeveloped the Form 5,500 series.
So employee benefit planscould utilize the Form 5,500
(01:53):
to satisfy annual reporting requirementsunder Title I and Title 4 of ERISA
and under the Internal Revenue Code.
The Form 5,500 series is an importantcompliance, research, and disclosure tool
for the Department of Labor,a disclosure document for planned
participants and beneficiaries,and a source of information and data
(02:15):
for use by other federal agencies,Congress and the private sector,
and assessing employee benefit, tax,and economic trends and policies.
The Form 5,500 is part of ERISA's overallreporting and disclosure framework,
which is intended to assure that employeebenefit plans are operated and managed
in accordance with the certain prescribedstandards, and that participants
(02:38):
and beneficiaries,as well as the regulators, are provided or
have access to sufficient informationto protect the rights and benefits
of participants and beneficiariesunder employee benefit plans.
So when is Form 5,500 requiredfor welfare plans?
Well, for welfare plans,There are two classifications.
(03:01):
There are funded and unfunded.
Funded meaning that it'srun through a trust.
The majority of them are unfunded.
In fact, all of the clientsthat I manage have unfunded plans.
And the threshold for filingfor an unfunded plan is if there are 100
or more employee participantson the first day of the plan year.
(03:26):
And so you're looking at active employeeparticipants and any employee cobras
that might be on the plan, but we're notlooking at dependents at all.
And so that's the threshold thatwe're looking for for an unfunded plan.
When are forms 5,500 due?
The 5,500 is due on the last dayof the seventh month following
(03:49):
the end of the plan year.
So for a calendar year plan,December 31st plan year-end,
the due date would be July 31st.
You can file an extension that gives youan additional two and a half months,
but that extension needs to be filedbefore the original due date.
So for a calendar year plan, July 31st,can extend it out to October 15th.
(04:10):
Now the big question, are there penaltiesfor not filing a Form 5,500?
Yes, there are.
What are classified aslate filers and non-filers.
For a late filer, the penaltycan be $50 a day with no limit
from the original due date.
(04:33):
And a non-filer, which is,I guess, someone who actually
would be found to have not filed at allthat needed to, that can be up to $300
a day, up to $30,000 per year.
But the DOL has come up with a programthat's called the Delinquent Filer
Voluntary Compliance program.
(04:53):
We call it DFVC.
And they're trying to getpeople just to comply.
They're not lookingto penalize people so much.
And so if you voluntarilysubmit late filings, the penalty is
only $10 a day from the original duedate, up to $2,000 per filing.
(05:14):
So that would be for a year would max outat $2,000, and then $4,000 for a plan.
So no matter how many yearspast the second year, the penalty
is maxed out at $4,000, which isa much more reasonable approach than
the other ones are could potentiallyreally financially impact the company.
Those penalties are large,but when you take any type of a government
(05:38):
filing that doesn't have a balanced due,which there is none with the 5,500,
the penalties have to be highso that it encourages people to
comply because otherwise they wouldn't.
And so that's whythe penalties are so large.
But it is great, the DFBCprogram, that it is a reduced penalty
(05:59):
and gets you back into compliance.
Okay, that makes sense.
Let me ask you this, what arethe common benefits of welfare plans?
Some of the benefits that we see mostare health, life insurance,
disability, dental, Dental Vision.
There are severance plans that you see.
(06:20):
Sometimes you'll see a prepaid legalplan, things like that.
Basically, it's your general offeringsby your employer,
your medical dental vision,life, Are there additional schedules
required to be attached to the form?Well, yeah.
For anything that's insured,there's a schedule A, which is where
we gather the insurance information.
(06:41):
If it's a self-funded benefit,one that's not insured, then
there is no schedule A that's required.
But we just record that self-fundedbenefit on this one particular line.
There's a little code with a four and aletter after it that tells that that's a
particular benefit that's being offered.
(07:02):
Are certain plan sponsors exemptfrom having to file the form?
Actually, there are.
There are several that are exempt.
Government plans, interestingly enough,the government has exempted themselves
from having to file 5,500.
Certain church plansunder ERISA Section 333.
(07:23):
Group insurance arrangements wherethere is an insurance plan that covers
multiple companies, then whoever offersthat insurance plan files the 5,500
for all of those participating companies.
So you as a company thatparticipates in one of those is not
required to file your own 5,500.
(07:44):
And then welfare plans that are maintainedoutside of the United States.
If you've got a US company that has a planjust for their office, say in England,
for instance, that particular planwould not have to file a 55.
And of course, just And to reiterate,in any other welfare plan unfunded
that's under 100, it's alsoexempt from having to file.
(08:07):
That is true.
Can a plan sponsor filemore than one welfare form?
Yeah.
If there's not a wrap document,which we'll be talking about in a little
bit, then each individual...
There can be multiple plans thatwould all have to be filed individually.
And the number of planswithout a wrap document,
(08:27):
you would take a look at the benefitsthat are offered, and then carriers.
So for instance, say you have gotone carrier that you've got your medical,
your dental, and your vision with.
You can group those benefitstogether under one 5,500.
But say if your medical is with onecompany, your dental is with another,
your vision is with another,then you could potentially
(08:49):
have three 5,500 that need to be filed.
So you have to look at iton a case-by-case basis.
Essentially, each individual insurancecontract becomes a planned document if
you don't have an overall plan documentthat wraps it all together.
And of course, a self-funded benefitwould not have an insurance contract,
but it would still be a separate plan.
(09:10):
What is a summary annual report?
A summary annual So the annual reportis basically a summary of the annual
report, which is the 5,500.
So it is a one-page document that takesall of the information that's in the 5,
500 and puts it in plain Englishso that the participants of the plan can
(09:31):
read through and see what benefits areoffered, what the total premiums that
the company has paid for those benefits.
And it also tells them ifthey would like to have a copy
of the complete 5,500, who to contactat the company for that information.
And if they can't get it from the companyfor whatever reason, it also gives them
the contact information at the Departmentof Labor where they can access
(09:53):
that information if for some reason theywant to review the entire 5,500 itself.
But it puts in very plain English allthe information in the 5,500 so someone
can review it and see what benefitsare available to them, what the cost is
of what's been offered during the year.
And that needs to be distributedto each participant who was a participant
(10:17):
in the plan at any time during the year.
So even when the 5,500 is filed,that's seven months after the plan year,
there may be people who are no longeremployed there, but they still need to be
provided a copy of that summary annualreport because they were
a participant during the plan year.
And the deadline for that is supposedto be nine months after the end
(10:40):
of the plan year, unless it was extended,in which case it's two months
after the extended due date.Right.
So it gives the company a little bitextra time to get that information
out to the planned participants.
In the summary annual report,I think it's in the treasury regulations,
there's basically a template thatexplains what the mandatory information
is that has to be put in it, and then inwhat order they want to see it presented.
(11:05):
And for us, we have vendor softwarethat takes the return that
we've prepared, and it just spits outthat summary as part of the program.
I'm curious, why does the governmentrequire the information
reported on Form 5,500?
Well, they require that informationso that plan participants
(11:25):
know what is available to them.
And then they also use that informationfor looking at economic trends, policies.
You think back years ago when ACAwas being put into effect, all the data
that was used in trying todetermine and legislate that law
(11:48):
into effect, all the informationcame from the 5,500s that were reported.
That's how the government knows how manyemployees have medical coverage and what
that cost is of that medical coverageis, how many employers are self-insuring
their medical, how manyare fully ensuring their medical.
So it's really a disclosure document forgovernmental entities, but also then for
(12:10):
plan participants, too, so that they knowwhat is available to them and how those
benefits are supposed to be administered.
And the time, usually, likeI said with the summary annual report,
when people request a copy of the full 5,500 is there's usually some issue that's
(12:32):
gone on, some claim that's been denied,something that they
think is not quite right.
So it's giving the plan participantsthat information to make sure that if
a benefit is available to them, that it'sactually being administered and provided
to them the way that it's supposed to be.
And some companies, there's issues.
(12:54):
And so it also...
It's a way of the employeeto have to have documented evidence
of what benefits are provided to them.
I'm going to step backbecause we have mentioned this before
about wrapped plan documents.
Could we maybe just address that?
What are wrapped plan documents?
(13:15):
Well, ERISA requires every plan sponsorto have a written plan document.
And if you don't have an overall documentthat wraps all of your benefits
together, employers typicallyWe rely upon the carrier booklets
that are provided to them.
So like we talked about,you need to file separate 5,500s.
(13:38):
It's a bigger administrative task.
If you put together a wrap plan document,it takes all of the benefits that
you offer, wraps them all into one plan.
You have one document that has all ofthe language required for ERISA, and then
that allows you to file one 5,500 foryour company instead of multiple 5,500.
(14:00):
So it really reduces the administrativeburden while also satisfying
the document requirements of ERISA.
So let me ask you this,who prepares the WRAP documents?
Is that something peoplewould do or is there somebody
they can have help them with that?
If a client wanted one, what would bethe options that they have on that?
(14:22):
Well, we are currently offering WRAP plandocument preparation services,
where we will ask the client allthe information of all the benefits they
provide, what the benefit is,who is eligible for that benefit,
what the entry date is for that benefit,all sorts of information.
And then once we get that,we do put together the WRAP document.
(14:44):
We provide them with the draftof it so that they can review.
And then once everything were settledand everything is in agreement,
we know that it's all accurate,then we provide them with the final copy
that they sign and execute.
Our WRAP document services, in additionto the WRAP document, we also
provide a HIPAA Policy and Proceduresdocument, and we also provide services
(15:07):
where we will put togethera cafeteria plan for you as well.
If you need that, if you're withholdingplan premiums on a pre-tax basis.
So it's amazing the amount of knowledgethat you have in this particular area.
So I'm going to ask you, obviously, thisis something you're very familiar with.
Tell us a little bit moreabout the 5,500 Tax Group.
(15:28):
The 5,500 Tax Group, this isour 20th year in business.
It was founded by myself and three otherpeople that worked for Ernst & Young.
We manage their National Employee BenefitsTax Group, and we decided to leave there
and to start our own company.
(15:49):
Being a niche tax practice,we don't do your normal type
of individual tax returns.
We're just employeebenefit-oriented, that is all.
And so, yeah, we have officesacross the United States.
We have four differentoffices, California, Texas,
South Carolina, and Pennsylvania.
(16:10):
In addition to the 5,500s, we touched onthat we do Document Preparation Services.
But we also do some related tax filingsthat go along with the 5,500.
For instance, we file the Form 720to pay PCORI fees for any
of your self-insured medical plans.
(16:30):
We file excise tax returns forother types of situations that come up.
Anything that is related to the 5,500s,89, 55 SSAs for deferred of the best
of benefits, for instance.
So we do those types of things.
And then in addition, the 5,500s,we talked about the health and welfare
(16:52):
plans here today, but we also provide 5,500 services for defined contribution
plans like your 401(k)sor define benefit plans is what we do.
We are a certified women's businessenterprise company owned by four women.
And yeah, very happy to be celebratingour 20th anniversary this year.
(17:15):
It's been a great adventure.
Our business has grown exponentiallysince we started it.
I think we have clientsnow in all 50 states.
We deal directly with clientsor we deal through their brokers.
A lot of our clients are brokers,and then we work on all their clients
(17:37):
and their company's plans.
Well, congratulations on 20 years.
I didn't realize that.Thank you.
It's been a big year for us.
No, that's great.
We will also add the webaddress to the show notes.
If people would like to get in touchwith you, they can go ahead and go
right there and be able to get to that.Okay.
This has been an incredible wealthof knowledge I mean, this has gone into
(18:01):
a lot of detail that I think is reallyimportant for people because it areas
you have to be aware of and what thecompliance are and what they're used for.
So I thank you very much for you and Alanfor sharing your knowledge on that.
I'm going to give you the last coupleof minutes to just if there's anything
we didn't cover or to give youthe last two minutes to say anything else
you'd like to talk about this object.
(18:21):
We touched on it.
So we basically...
We sometimes work directly with a client,directly with the plan sponsor.
But then a lot of our businessactually is through a broker.
So the brokers, they arrange the benefitsfor their clients, and then they want
those clients to be in compliancewith the Form 5,500 requirements.
(18:43):
And so we end up with an entire officefrom a brokerage where they'll
send all the 5,500 work to us.
And so, yeah, we do a lot of work that'sactually for brokers And some of them
want us to work directly with the client,and other ones want us to be just
(19:08):
the preparer, and they want to handleall the interactions with the client.
And we have plenty of bothof those situations.
And is there anythingyou'd like to add as well?
Yes.
Well, first off, Neil,I'd like to thank you for inviting us
to do this podcast today.Oh, my pleasure.
We really appreciate it.
And just one of the thingsI wanted to add to it, like Alan said,
(19:30):
Certain people we work with,they want to handle things differently.
One of the things that we reallypride ourselves on is our flexibility.
However you want to handle a relationship,however you want to handle the situation,
whatever it goes,we are willing to work with you.
As you had said, this is a complex area.
It is amazing to me, though, how manypeople think that it is something simple.
(19:54):
You just do it the sameas it was done last year.
It's not that way.
Because a lot of timeswhen we get new clients
and we'll look at it and it's like,Oh, jeez, this is wrong, this is wrong.
And you want to make sure that any timeyou're dealing with the government,
that whatever you are preparingis as accurate as possible.
So you want to go to someonewho is an expert at this.
(20:16):
And that's what Alan was touching on,that we deal with brokers.
Brokers are great at writingthe insurance, getting quotes
for their customers.
This isn't one of their areasof expertise, but they want
their clients to be taken careand that's why they turn to us.
So we pride ourselvesin just the specialty area.
(20:36):
The four of us are foundingmembers of the firm.
We have well over 30 years of experience.
We're all CPAs.
So we are a good place to bringyour business and know that it is handled
and handled correctly for your clientswith whatever flexibility, whatever type
(20:57):
of situation that you want to deal with.
We are open to doing that.
That's fantastic.
I think that's one of the reasonsI wanted you to come on
was because I am a big proponentof if there's an expert out there,
I think people need to learn there.
Sometimes it's better,and in the long run,
it's going to be easier,and in many cases, save you money to hire
(21:18):
an expert to do it rather than try togo through the waters yourself and try
to figure out what's going to workand then end up with penalties
or anything like that.
This just seems like a natural fitfor something like that.
Yeah, I agree.
Well, Anne, Alan, thank you very,very much, again, for all the information
that you provided on thisand for being a part of the program.
(21:39):
Like I said, we will put informationso people can find your organization,
we can get in touch with you.
I thank you very muchfor being on our podcast.
Thank you.
Thank you.
Thank you for listening.
We hope this podcast was entertainingand informative and ask you to give us
a thumbs up and subscribe to our channel.
(22:00):
You have any questions, please contact usto the address in the show notes below.
What is Form 5,500?
If your business or organization offerspension or welfare benefit plans,
you'll want to listen to this episodethat explains the importance of the form,
filing requirements,and the hefty penalties
for incorrect or late submissions.
Anne Myers and Alan Perka from the 5,500 Tax Group join us to help explain
(00:21):
the details and filing of this formtoday on Small Business Talks.
The Welfare Plan Form 5,500 is a compliance and disclosure
document that employers must filewith the Department of Labor
and the Internal Revenue Servicefor pension or welfare benefit plans
(00:45):
covered by the EmployeeRetirement Income Security Act.
The purpose of Form 5,500 is to providethe IRS and DOL with the information
about the plan's operation and compliancewith government regulations.
It's important for you understand whatWelfare Plan Form 55 Compliance
is all about.
To help us better understand,we have Anne Myers, partner,
(01:09):
and Alan Perka, Senior Managerfrom the 5,500 Tax Group with us today.
Welcome to the program.Thank you.
How are you doing this morning?Doing well.
I don't know how good my introductionwas to the topic, so I'm going to ask if
you could just give us a brief overviewas to what is Form 5,500 and what does it
(01:29):
have to do with welfare plans?
Yeah, I think you did a pretty good jobintroducing what the form is, but I'll go
into a little bit more detail.
The Department of Labor, theInternal Revenue Service, and the Pension
Benefit Guarantee Corporation I jointlydeveloped the Form 5,500 series.
So employee benefit planscould utilize the Form 5,500
(01:53):
to satisfy annual reporting requirementsunder Title I and Title 4 of ERISA
and under the Internal Revenue Code.
The Form 5,500 series is an importantcompliance, research, and disclosure tool
for the Department of Labor,a disclosure document for planned
participants and beneficiaries,and a source of information and data
(02:15):
for use by other federal agencies,Congress and the private sector,
and assessing employee benefit, tax,and economic trends and policies.
The Form 5,500 is part of ERISA's overallreporting and disclosure framework,
which is intended to assure that employeebenefit plans are operated and managed
in accordance with the certain prescribedstandards, and that participants
(02:38):
and beneficiaries,as well as the regulators, are provided or
have access to sufficient informationto protect the rights and benefits
of participants and beneficiariesunder employee benefit plans.
So when is Form 5,500 requiredfor welfare plans?
Well, for welfare plans,There are two classifications.
(03:01):
There are funded and unfunded.
Funded meaning that it'srun through a trust.
The majority of them are unfunded.
In fact, all of the clientsthat I manage have unfunded plans.
And the threshold for filingfor an unfunded plan is if there are 100
or more employee participantson the first day of the plan year.
(03:26):
And so you're looking at active employeeparticipants and any employee cobras
that might be on the plan, but we're notlooking at dependents at all.
And so that's the threshold thatwe're looking for for an unfunded plan.
When are forms 5,500 due?
The 5,500 is due on the last dayof the seventh month following
(03:49):
the end of the plan year.
So for a calendar year plan,December 31st plan year-end,
the due date would be July 31st.
You can file an extension that gives youan additional two and a half months,
but that extension needs to be filedbefore the original due date.
So for a calendar year plan, July 31st,can extend it out to October 15th.
(04:10):
Now the big question, are there penaltiesfor not filing a Form 5,500?
Yes, there are.
What are classified aslate filers and non-filers.
For a late filer, the penaltycan be $50 a day with no limit
from the original due date.
(04:33):
And a non-filer, which is,I guess, someone who actually
would be found to have not filed at allthat needed to, that can be up to $300
a day, up to $30,000 per year.
But the DOL has come up with a programthat's called the Delinquent Filer
Voluntary Compliance program.
(04:53):
We call it DFVC.
And they're trying to getpeople just to comply.
They're not lookingto penalize people so much.
And so if you voluntarilysubmit late filings, the penalty is
only $10 a day from the original duedate, up to $2,000 per filing.
(05:14):
So that would be for a year would max outat $2,000, and then $4,000 for a plan.
So no matter how many yearspast the second year, the penalty
is maxed out at $4,000, which isa much more reasonable approach than
the other ones are could potentiallyreally financially impact the company.
Those penalties are large,but when you take any type of a government
(05:38):
filing that doesn't have a balanced due,which there is none with the 5,500,
the penalties have to be highso that it encourages people to
comply because otherwise they wouldn't.
And so that's whythe penalties are so large.
But it is great, the DFBCprogram, that it is a reduced penalty
(05:59):
and gets you back into compliance.
Okay, that makes sense.
Let me ask you this, what arethe common benefits of welfare plans?
Some of the benefits that we see mostare health, life insurance,
disability, dental, Dental Vision.
There are severance plans that you see.
(06:20):
Sometimes you'll see a prepaid legalplan, things like that.
Basically, it's your general offeringsby your employer,
your medical dental vision,life, Are there additional schedules
required to be attached to the form?Well, yeah.
For anything that's insured,there's a schedule A, which is where
we gather the insurance information.
(06:41):
If it's a self-funded benefit,one that's not insured, then
there is no schedule A that's required.
But we just record that self-fundedbenefit on this one particular line.
There's a little code with a four and aletter after it that tells that that's a
particular benefit that's being offered.
(07:02):
Are certain plan sponsors exemptfrom having to file the form?
Actually, there are.
There are several that are exempt.
Government plans, interestingly enough,the government has exempted themselves
from having to file 5,500.
Certain church plansunder ERISA Section 333.
(07:23):
Group insurance arrangements wherethere is an insurance plan that covers
multiple companies, then whoever offersthat insurance plan files the 5,500
for all of those participating companies.
So you as a company thatparticipates in one of those is not
required to file your own 5,500.
(07:44):
And then welfare plans that are maintainedoutside of the United States.
If you've got a US company that has a planjust for their office, say in England,
for instance, that particular planwould not have to file a 55.
And of course, just And to reiterate,in any other welfare plan unfunded
that's under 100, it's alsoexempt from having to file.
(08:07):
That is true.
Can a plan sponsor filemore than one welfare form?
Yeah.
If there's not a wrap document,which we'll be talking about in a little
bit, then each individual...
There can be multiple plans thatwould all have to be filed individually.
And the number of planswithout a wrap document,
(08:27):
you would take a look at the benefitsthat are offered, and then carriers.
So for instance, say you have gotone carrier that you've got your medical,
your dental, and your vision with.
You can group those benefitstogether under one 5,500.
But say if your medical is with onecompany, your dental is with another,
your vision is with another,then you could potentially
(08:49):
have three 5,500 that need to be filed.
So you have to look at iton a case-by-case basis.
Essentially, each individual insurancecontract becomes a planned document if
you don't have an overall plan documentthat wraps it all together.
And of course, a self-funded benefitwould not have an insurance contract,
but it would still be a separate plan.
(09:10):
What is a summary annual report?
A summary annual So the annual reportis basically a summary of the annual
report, which is the 5,500.
So it is a one-page document that takesall of the information that's in the 5,
500 and puts it in plain Englishso that the participants of the plan can
(09:31):
read through and see what benefits areoffered, what the total premiums that
the company has paid for those benefits.
And it also tells them ifthey would like to have a copy
of the complete 5,500, who to contactat the company for that information.
And if they can't get it from the companyfor whatever reason, it also gives them
the contact information at the Departmentof Labor where they can access
(09:53):
that information if for some reason theywant to review the entire 5,500 itself.
But it puts in very plain English allthe information in the 5,500 so someone
can review it and see what benefitsare available to them, what the cost is
of what's been offered during the year.
And that needs to be distributedto each participant who was a participant
(10:17):
in the plan at any time during the year.
So even when the 5,500 is filed,that's seven months after the plan year,
there may be people who are no longeremployed there, but they still need to be
provided a copy of that summary annualreport because they were
a participant during the plan year.
And the deadline for that is supposedto be nine months after the end
(10:40):
of the plan year, unless it was extended,in which case it's two months
after the extended due date.Right.
So it gives the company a little bitextra time to get that information
out to the planned participants.
In the summary annual report,I think it's in the treasury regulations,
there's basically a template thatexplains what the mandatory information
is that has to be put in it, and then inwhat order they want to see it presented.
(11:05):
And for us, we have vendor softwarethat takes the return that
we've prepared, and it just spits outthat summary as part of the program.
I'm curious, why does the governmentrequire the information
reported on Form 5,500?
Well, they require that informationso that plan participants
(11:25):
know what is available to them.
And then they also use that informationfor looking at economic trends, policies.
You think back years ago when ACAwas being put into effect, all the data
that was used in trying todetermine and legislate that law
(11:48):
into effect, all the informationcame from the 5,500s that were reported.
That's how the government knows how manyemployees have medical coverage and what
that cost is of that medical coverageis, how many employers are self-insuring
their medical, how manyare fully ensuring their medical.
So it's really a disclosure document forgovernmental entities, but also then for
(12:10):
plan participants, too, so that they knowwhat is available to them and how those
benefits are supposed to be administered.
And the time, usually, likeI said with the summary annual report,
when people request a copy of the full 5,500 is there's usually some issue that's
(12:32):
gone on, some claim that's been denied,something that they
think is not quite right.
So it's giving the plan participantsthat information to make sure that if
a benefit is available to them, that it'sactually being administered and provided
to them the way that it's supposed to be.
And some companies, there's issues.
(12:54):
And so it also...
It's a way of the employeeto have to have documented evidence
of what benefits are provided to them.
I'm going to step backbecause we have mentioned this before
about wrapped plan documents.
Could we maybe just address that?
What are wrapped plan documents?
(13:15):
Well, ERISA requires every plan sponsorto have a written plan document.
And if you don't have an overall documentthat wraps all of your benefits
together, employers typicallyWe rely upon the carrier booklets
that are provided to them.
So like we talked about,you need to file separate 5,500s.
(13:38):
It's a bigger administrative task.
If you put together a wrap plan document,it takes all of the benefits that
you offer, wraps them all into one plan.
You have one document that has all ofthe language required for ERISA, and then
that allows you to file one 5,500 foryour company instead of multiple 5,500.
(14:00):
So it really reduces the administrativeburden while also satisfying
the document requirements of ERISA.
So let me ask you this,who prepares the WRAP documents?
Is that something peoplewould do or is there somebody
they can have help them with that?
If a client wanted one, what would bethe options that they have on that?
(14:22):
Well, we are currently offering WRAP plandocument preparation services,
where we will ask the client allthe information of all the benefits they
provide, what the benefit is,who is eligible for that benefit,
what the entry date is for that benefit,all sorts of information.
And then once we get that,we do put together the WRAP document.
(14:44):
We provide them with the draftof it so that they can review.
And then once everything were settledand everything is in agreement,
we know that it's all accurate,then we provide them with the final copy
that they sign and execute.
Our WRAP document services, in additionto the WRAP document, we also
provide a HIPAA Policy and Proceduresdocument, and we also provide services
(15:07):
where we will put togethera cafeteria plan for you as well.
If you need that, if you're withholdingplan premiums on a pre-tax basis.
So it's amazing the amount of knowledgethat you have in this particular area.
So I'm going to ask you, obviously, thisis something you're very familiar with.
Tell us a little bit moreabout the 5,500 Tax Group.
(15:28):
The 5,500 Tax Group, this isour 20th year in business.
It was founded by myself and three otherpeople that worked for Ernst & Young.
We manage their National Employee BenefitsTax Group, and we decided to leave there
and to start our own company.
(15:49):
Being a niche tax practice,we don't do your normal type
of individual tax returns.
We're just employeebenefit-oriented, that is all.
And so, yeah, we have officesacross the United States.
We have four differentoffices, California, Texas,
South Carolina, and Pennsylvania.
(16:10):
In addition to the 5,500s, we touched onthat we do Document Preparation Services.
But we also do some related tax filingsthat go along with the 5,500.
For instance, we file the Form 720to pay PCORI fees for any
of your self-insured medical plans.
(16:30):
We file excise tax returns forother types of situations that come up.
Anything that is related to the 5,500s,89, 55 SSAs for deferred of the best
of benefits, for instance.
So we do those types of things.
And then in addition, the 5,500s,we talked about the health and welfare
(16:52):
plans here today, but we also provide 5,500 services for defined contribution
plans like your 401(k)sor define benefit plans is what we do.
We are a certified women's businessenterprise company owned by four women.
And yeah, very happy to be celebratingour 20th anniversary this year.
(17:15):
It's been a great adventure.
Our business has grown exponentiallysince we started it.
I think we have clientsnow in all 50 states.
We deal directly with clientsor we deal through their brokers.
A lot of our clients are brokers,and then we work on all their clients
(17:37):
and their company's plans.
Well, congratulations on 20 years.
I didn't realize that.Thank you.
It's been a big year for us.
No, that's great.
We will also add the webaddress to the show notes.
If people would like to get in touchwith you, they can go ahead and go
right there and be able to get to that.Okay.
This has been an incredible wealthof knowledge I mean, this has gone into
(18:01):
a lot of detail that I think is reallyimportant for people because it areas
you have to be aware of and what thecompliance are and what they're used for.
So I thank you very much for you and Alanfor sharing your knowledge on that.
I'm going to give you the last coupleof minutes to just if there's anything
we didn't cover or to give youthe last two minutes to say anything else
you'd like to talk about this object.
(18:21):
We touched on it.
So we basically...
We sometimes work directly with a client,directly with the plan sponsor.
But then a lot of our businessactually is through a broker.
So the brokers, they arrange the benefitsfor their clients, and then they want
those clients to be in compliancewith the Form 5,500 requirements.
(18:43):
And so we end up with an entire officefrom a brokerage where they'll
send all the 5,500 work to us.
And so, yeah, we do a lot of work that'sactually for brokers And some of them
want us to work directly with the client,and other ones want us to be just
(19:08):
the preparer, and they want to handleall the interactions with the client.
And we have plenty of bothof those situations.
And is there anythingyou'd like to add as well?
Yes.
Well, first off, Neil,I'd like to thank you for inviting us
to do this podcast today.Oh, my pleasure.
We really appreciate it.
And just one of the thingsI wanted to add to it, like Alan said,
(19:30):
Certain people we work with,they want to handle things differently.
One of the things that we reallypride ourselves on is our flexibility.
However you want to handle a relationship,however you want to handle the situation,
whatever it goes,we are willing to work with you.
As you had said, this is a complex area.
It is amazing to me, though, how manypeople think that it is something simple.
(19:54):
You just do it the sameas it was done last year.
It's not that way.
Because a lot of timeswhen we get new clients
and we'll look at it and it's like,Oh, jeez, this is wrong, this is wrong.
And you want to make sure that any timeyou're dealing with the government,
that whatever you are preparingis as accurate as possible.
So you want to go to someonewho is an expert at this.
(20:16):
And that's what Alan was touching on,that we deal with brokers.
Brokers are great at writingthe insurance, getting quotes
for their customers.
This isn't one of their areasof expertise, but they want
their clients to be taken careand that's why they turn to us.
So we pride ourselvesin just the specialty area.
(20:36):
The four of us are foundingmembers of the firm.
We have well over 30 years of experience.
We're all CPAs.
So we are a good place to bringyour business and know that it is handled
and handled correctly for your clientswith whatever flexibility, whatever type
(20:57):
of situation that you want to deal with.
We are open to doing that.
That's fantastic.
I think that's one of the reasonsI wanted you to come on
was because I am a big proponentof if there's an expert out there,
I think people need to learn there.
Sometimes it's better,and in the long run,
it's going to be easier,and in many cases, save you money to hire
(21:18):
an expert to do it rather than try togo through the waters yourself and try
to figure out what's going to workand then end up with penalties
or anything like that.
This just seems like a natural fitfor something like that.
Yeah, I agree.
Well, Anne, Alan, thank you very,very much, again, for all the information
that you provided on thisand for being a part of the program.
(21:39):
Like I said, we will put informationso people can find your organization,
we can get in touch with you.
I thank you very muchfor being on our podcast.
Thank you.
Thank you.
Thank you for listening.
We hope this podcast was entertainingand informative and ask you to give us
a thumbs up and subscribe to our channel.
(22:00):
You have any questions, please contact usto the address in the show notes below.
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