July Is Form 5500 Time: Don't Let an ERISA Bonding Gap Trigger a DOL Audit

When you sponsor a calendar-year retirement plan, July brings more than just summer barbecues—it brings the high-stakes responsibility of filing Form 5500 by the July 31 deadline. While most plan sponsors rely on third-party administrators (TPAs) to prepare this report, the legal liability ultimately rests on your shoulders. Signing off on errors, omissions, or an outdated ERISA fidelity bond carries a literal risk of “penalty for perjury.” Pragmatically, an incorrect or outdated ERISA fidelity bond is an immediate red flag that can trigger a costly and disruptive Department of Labor (DOL) audit. Before you sign and submit your filing, read on for a quick refresh on the nuts and bolts of Form 5500 compliance—and pointers on protecting yourself as a fiduciary too. 

Due By July 31, 2026

Form 5500 is due on the last day of the seventh month after a plan year ends. For calendar-year plans, that means the 2025 plan year return is due July 31, 2026, filed electronically through the Department of Labor’s EFAST2 system.

Depending on plan size, sponsors file one of three versions:

• Form 5500 — for plans with 100 or more participants, generally requiring an independent auditor’s report.
• Form 5500-SF — the simplified short form for plans with fewer than 100 participants.
• Form 5500-EZ — for one-participant (owner-only) plans, required once combined plan assets exceed $250,000.

For more information, review the IRS Form 5500 Corner and the 2025 Instructions for Form 5500 for the Department of Labor. 

If you need more time, be sure to file Form 5558 on or before July 31 to be granted an automatic, no-questions-asked 2.5-month extension, pushing the deadline to October 15, 2026. There’s no approval process — the extension is automatic simply by filing on time.

Take Review and Sign Off Seriously

Annual submission of Form 5500 is the way retirement plan sponsors provide both the Department of Labor (DOL) and the Internal Revenue Service (IRS) with information on how the plan is doing. 

Form 5500 is a public record that can be scrutinized ever more easily with the advancement of artificial intelligence. Errors and omissions reflected on Form 5500 are a known fast track to investigations, audits and lawsuits. 

Attorneys from Groom Law Group and CAPTRUST advice retirement plan sponsors to take sign off on Form 5500 seriously, and underscore: “Form 5500 is filed under penalty of perjury, which means that anyone signing should, at a minimum, review the form at a high level to be sure that nothing in the form is obviously inaccurate.” 

The Line 4e Trap: Meeting ERISA Fidelity Bond Requirements

Buried in the Form 5500 schedules—specifically Line 4e of Form 5500 (or Part I, Line 11 on the Short Form 5500-SF)—is a direct question: Was this plan covered by an ERISA fidelity bond during the plan year, and if so, for what amount? It sounds simple, but it is where a surprising number of filings fall apart.

The DOL views the failure to maintain a required ERISA bond as a direct fiduciary breach. Under ERISA Section 412, anyone who “handles” plan funds or property must be bonded for at least 10% of the funds handled, with a minimum bond amount of $1,000 and a maximum requirement of $500,000 per plan. That cap rises to $1,000,000 for plans that hold employer securities, such as ESOPs. If the bond amount reported on your filing doesn’t match what is actually in force—or if the box is checked “No”—it acts as an immediate red flag that can prompt a closer DOL review. Afterall, if relatively basic fiduciary compliance matters are not handled properly, what else might not be up to par? When reviewing your ERISA Bond coverage before signing off on Form 5500, it’s wise to check:

• The Named Insured: The bond must explicitly be issued in the exact name of the plan—not the plan sponsor, the business owner, or the company.
• The Treasury List: The surety company issuing the bond must appear on the U.S. Department of the Treasury’s list of approved sureties (Circular 570).
• Continuous Coverage: Coverage must be continuous for the entire plan year being reported, including the very first day.

Late or Deficient Form 5500 Filing: Costly Out of Pocket Penalties

The penalties for a late, incomplete, or deficient Form 5500 hit plan sponsors from two federal agencies at once—and neither is capped generously:

• The Department of Labor (DOL): Can assess a civil penalty of up to $2,739 per day under ERISA Section 502(c)(2), with no statutory maximum cap.
• The Internal Revenue Service (IRS): Can separately assess $250 per day, up to a maximum cap of $150,000 per plan year.

If you discover an unfiled or delinquent return before the federal government contacts you, try the Delinquent Filer Voluntary Compliance Program (DFVCP). The DFVCP program allows plan sponsors to voluntarily submit back-filings and drastically reduce penalties—typically capping them in the $750 to $4,000 range per filing, depending on plan size.

The Perjury Attestation: Outsourcing the Paperwork vs. Outsourcing 

Most plan sponsors outsource their Form 5500 preparation to a reliable Third-Party Administrator (TPA), recordkeeper, or CPA. That is normal, and it is smart—these forms are highly technical. But here is the critical part that catches many business owners completely off guard: outsourcing the paperwork does not outsource the legal responsibility.

Directly above the signature line, Form 5500 requires the filer to attest, under penalties of perjury, that the return has been examined and is true, correct, and complete. The plan sponsor signs that statement personally—not the TPA who prepared it. If the fidelity bond box is wrong, if a required compliance schedule is missing, or if a delinquent contribution went unreported, the signature on file is yours, and so is the personal exposure.

As we all know–errors and omissions happen–even with diligence. It’s a big temptation for swamped business owners to give Form 5500 a skim before signing off and moving on. But remember, that signature is a personal legal attestation. Remember too that your ERISA Bond is required for the protection of the plan’s money from fraud or theft. ERISA bonds leave your personal assets completely unprotected from a DOL penalty or a fiduciary lawsuit. To close that gap, plan sponsors must pair their fidelity bond with dedicated Fiduciary Liability Insurance (FLI) and Cyber Insurance—ensuring personal and business protection.

A Pre-Filing Bonding Checklist

Before your Form 5500 goes out the door, run through this quick check:

• Confirm the bond amount equals at least 10% of current plan assets, up to the applicable cap.
• Confirm the surety is Treasury-listed for the current year.
• Confirm coverage didn’t lapse at any point during the plan year — including during a provider transition.
• If plan assets grew significantly during the year, confirm the bond amount grew with them.
• Keep proof of coverage on file in case the DOL requests documentation after filing.

Plan sponsors can obtain a compliant ERISA bond in minutes, and Colonial Surety Company’s retroactive coverage option can help close gaps discovered during the filing process — the kind of gap that would otherwise leave the current or prior plan year underinsured heading into a DOL review.

Secure Complete Protection with Colonial Surety Company

Colonial Surety Company makes it easy for retirement plan sponsors to maintain ERISA Bond compliance–and protect themselves and their businesses. 

Many business owners don’t realize that an ERISA bond only protects the plan’s money from internal theft or fraud. It does not protect you.

Under ERISA’s strict rules, even an honest mistake—like missing a filing deadline, a documentation oversight, or failing to properly monitor plan fees—can lead to a personal fiduciary breach allegation. Because you cannot legally use plan assets to defend yourself, your personal finances are on the line. With specialized ERISA legal defense routinely costing around $600 an hour, even a groundless claim can become incredibly expensive to resolve.

Cybersecurity adds another layer of personal risk. The Department of Labor explicitly states that safeguarding plan data is a fiduciary duty. For example, if participant data or assets are compromised in a cyberattack and you do not have a formal response plan in place, the DOL can treat the incident as a direct breach of your fiduciary responsibilities.

The Solution: The Fiduciary + Cyber Liability Bundle

To close these gaps, Colonial Surety Company lets retirement plan sponsors upgrade the mandatory ERISA bond into a single, comprehensive defense package.When you secure your bond, you can instantly add:

• Fiduciary Liability Insurance: Up to $1,000,000 to cover your legal defense costs and regulatory penalties if you face claims of administrative errors or omissions.
• Cyber Liability Insurance: Included at no extra cost, providing the expert-led breach response services and business coverage needed to satisfy important   DOL cybersecurity obligations.
• One-Click Simplicity: You get total protection through a single dashboard, with no separate applications, no complex underwriting, and multi-year options that lock in your rates as your plan assets grow.

It takes just a few minutes to secure your business, your plan, and your personal assets for only a few dollars a day.

Get Your ERISA Protection Bundle Now 

What makes the Colonial Surety Company a uniquely trustworthy and efficient provider of ERISA Fidelity Bonds, Fiduciary Liability Insurance and Cyber Liability Insurance? Colonial Surety Company is:

• Treasury-Listed and “A” Excellent rated by A.M. Best — credentials that matter

• In business since 1930 — institutional stability and deep ERISA expertise

• Direct carrier, not a broker — no agent markups, no unnecessary fees, no waiting on callbacks

• Fully digital — quote, purchase, and download proof of coverage in minutes online

• Licensed nationwide with a U.S.-based customer service team trained on ERISA