Quick question for tax pros. The company I work for received a notice that we didn't file Form 5500 a couple of years ago. This is a very small company (3 employees) and the company pays for our health insurance. We don't offer a 401(k) or any other benefits outside of the health insurance.
From what I'm understanding, we shouldn't have to file form 5500, is that correct?
There is a form to fill out if we're not required to file, just wanted to be sure there wasn't something I was missing here.
I don't believe that's correct though, this is what is listed when you look at the instructions for that form under the plans exempt from filing header:
12. A welfare benefit plan that covers fewer than 100
participants as of the beginning of the plan year and is
unfunded, fully insured, or a combination of insured and
unfunded. For this purpose:
a. An unfunded welfare benefit plan has its benefits
paid as needed directly from the general assets of the
employer or the employee organization that sponsors the
Note. Plans that are NOT unfunded include those plans
that received employee (or former employee) contributions
during the plan year and/or used a trust or separately
maintained fund (including a Code section 501(c)(9) trust)
to hold plan assets or act as a conduit for the transfer of
plan assets during the plan year. A welfare benefit plan
with employee contributions that is associated with a
cafeteria plan under Code section 125 may be treated for
annual reporting purposes as an unfunded welfare benefit
plan if it meets the requirements of DOL Technical
Release 92-01, 57 Fed. Reg. 23272 (June 2, 1992) and 58
Fed. Reg. 45359 (Aug. 27, 1993). The mere receipt of
COBRA contributions or other after-tax participant
contributions (e.g., retiree contributions) by a cafeteria
plan would not by itself affect the availability of the relief
provided for cafeteria plans that otherwise meet the
requirements of DOL Technical Release 92-01. See 61
Fed. Reg. 41220, 41222-23 (Aug. 7, 1996).
b. A fully insured welfare benefit plan has its benefits
provided exclusively through insurance contracts or
policies, the premiums of which must be paid directly to
the insurance carrier by the employer or employee
organization from its general assets or partly from its
general assets and partly from contributions by its
employees or members (which the employer or employee
organization forwards within 3 months of receipt). The
insurance contracts or policies discussed above must be
issued by an insurance company or similar organization
(such as Blue Cross, Blue Shield or a health maintenance
organization) that is qualified to do business in any state.
c. A combination unfunded/insured welfare benefit plan
has its benefits provided partially as an unfunded plan and
partially as a fully insured plan. An example of such a plan
is a welfare benefit plan that provides medical benefits as
in “a” above and life insurance benefits as in “b” above.
See 29 CFR 2520.104-20.
Based on that, since the health insurance is paid by the company we are exempt from filing. Correct?
Why are you posting here ... you issue is with the IRS ... they are the ones you need to respond to and support your position of not having to file this form. The retirement plan/insurance company usually files these for you automatically so also talk to them and have them explain it to you and the IRS.