Before Form 5500 is filed each year, retirement plan sponsors must sign off. Lawyers specializing in ERISA remind us that filing is “under penalty of perjury.” What does that mean? Read on to find out.
Sign Here?
Not so fast! Legal experts from Groom Law Group and CAPTRUST remind us: “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.” Annual submission of Form 5500 is how retirement plan sponsors provide the DOL and IRS with information on how the plan is doing; errors and omissions related to Form 5500 are a fast track to investigations and audits. Sign off should be taken seriously by both of the signatories:
There are actually two signature lines on the form: one for the plan administrator and second for the employer/plan sponsor….The plan administrator can be the employer or a third party; you will need to check the plan document to determine who has been designated the plan administrator. If it is a third party, you should NOT sign the 5500 as plan administrator; a representative of the third party should sign instead. If it is the employer/plan sponsor, and you are an authorized representative of the employer, you should indeed sign as plan administrator, recognizing that you may be then responsible for various administrative functions of the plan….
The second signature line, which is for the employer/plan sponsor, is more straightforward to complete. If you are an authorized representative of the employer, you may sign here; if you are not, you may not.
Updates to Form 5500 and 5500-SF (the short form) have been made, reflecting regulatory shifts. Plan Sponsor experts underscore:
If you do sign as an authorized representative of the employer, note that the plan document likely assigns many responsibilities to the employer, so you should be prepared to carry out these responsibilities. Most importantly, the employer is often designated as a fiduciary under the plan, which includes a myriad of responsibilities that go well beyond filling the 5500 form and apply to retirement plans both large and small.
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Good To Know
While the Department of Labor oversees compliance with ERISA, the IRS polices the tax code. Both rely on Form 5500 as a means of identifying potential compliance issues—and both agencies have increased the penalties for delays and oversights related to Form 5500. A common compliance trigger related to the filing of Form 5500 is failure to have an up to date ERISA Fidelity Bond. Remember, the ERISA Fidelity Bond protects the assets of the retirement plan from theft and can only be obtained from a surety listed by the US Department of Treasury. That’s why plan sponsors across the country trust leading national ERISA bond provider, Colonial Surety. Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not adequately covered. Additionally, plan sponsors can opt for cost-saving multi-year coverage, ensuring the ERISA bond is Department of Labor compliant for the life of its term. Keep in mind that although an ERISA bond is required, it leaves the personal assets of fiduciaries exposed: only fiduciary liability insurance provides protection against an alleged or actual breach.
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