The ABV Benefits Advisor (originally published by ABVAdvisors on September 28, 2015)
What do you need to know about Form 5500 and the Summary Annual Report (SAR) for welfare benefit plans?
The Department of Labor requires plan administrators to report certain enrollment and insurance information for welfare benefit plans each year. To comply with this requirement, plan administrators (who are most commonly the employer sponsoring the plan) are required to file Form 5500 electronically with the DOL. Additionally, a summary of the information on the Form 5500 must be furnished to individual plan participants annually. This summary is called the Summary Annual Report (SAR).
Remind me again: What is Form 5500?
The Form 5500, formally titled the “Annual Return/Report of Employee Benefit Plan””, is the filing required annually by the DOL & Internal Revenue Service, which reports and discloses information regarding employee benefit plans. The Form 5500 is intended to ensure that the overall operation and management of these plans comply with certain Titles outlined in the Employee Retirement Income Security Act of 1974 (ERISA). Specifically, this information enables regulators to effectively protect the rights and benefits of participants and beneficiaries.
WHAT exactly is the SAR?
The SAR is a “narrative” version of the information contained in the Form 5500 for a plan.
Basically, it is an understandable summary of the information reported on Form 5500.
WHO must receive the SAR?
For welfare benefit plans, all participants covered under the plan are required to receive the SAR.
WHEN is the SAR due?
The SAR must be furnished to each plan participant on or before the last day of the ninth (9th) month following the end of the plan year. If an extension of time to file Form 5500 was requested, then the SAR must be furnished within 2 months after the extended due date. Accordingly, for 2014 calendar year plans, the SAR must be distributed to plan participants by September 30, 2015. For extended calendar year plans, the SAR must be distributed to plan participants by December 15, 2015.
HOW should the SAR be furnished to participants?
Plan participants are entitled to receive all ERISA-required documents in a manner that is “reasonably calculated to ensure actual receipt of the material.” Approved delivery methods are first class mail and in-hand delivery (i.e., intra-office mail system). Electronic delivery is permitted (i.e., email, company website or intranet) as long as certain requirements regarding work-related computer access, proper notice & actual delivery receipt are satisfied.
WHAT if someone asks for a copy of the “full annual report”?
If a participant requests a copy of the “full annual report” after reviewing the SAR, simply provide them with a fully-executed copy (i.e., electronically signed) of the Form 5500.
WHAT are the rules for self-funded plans & the SAR?
A self-funded welfare benefit plan that is totally UNFUNDED (that is, it pays all benefits directly from the general assets of the employer) is not required to provide a SAR to plan participants.
WOULD you like help complying?
First, remember the SAR is an ERISA requirement & noncompliance is strictly enforced by the DOL. Don’t worry. We can help.
Contact your BIM representative today to learn how BIM and ABV can assist you with compliance.
Ph: 859-255-9455