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Q&A: Section 125 Plans

Answers are provided by Robyn Morris of R. C. Morris, Incorporated

Annual Form 5500 Filing Requirements for 125 Plans

(Posted March 24, 1997)

Question 4: Do all Section 125 Plans need to file an annual Form 5500 (or 5500-C/R)?

Answer: Yes. Code Section 6039D requires an annual filing for certain plans including Section 125. The Form 5500 instructions might lead one to believe that Section 125 Plans fall under the filing exemption granted to welfare plans with less than 100 participants. It is important to remember that a Section 125 Plan is not a welfare plan, it is a fringe benefit plan.

A Section 125 Plan has a Form 5500 filing requirement not because of ERISA, but because of Code Section 6039D. Therefore, a Section 125 plan of any participation size must file a Form 5500 (or 5500-C/R if less than 100 participants.)

By the way, if you read 6039D, don't become alarmed at all of the other plans that seem required to file. Internal Revenue Notice 90-24 granted an exclusion to certain plans if they were filing only because of this Code Section 6039D. Unfortunately, Section 125 Plans were not among those exempted from filing.

Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. The laws, regulations and court decisions in this area change frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the laws, regulations or court decisions that occur after the date on which that Q&A is posted.
Copyright 1997-1999 R. C. Morris, Incorporated
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