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Flexible Benefit Plans & 5500's


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I have noticed two things.

1) There are flex bene plans filing 5500s but only submitting the first two pages with no schedules, checking General Assets. Is this still required? I think not as per Notice 2002-24, but then why are they still being filed?

2) There are small flex bene plans filing 5500s checking Trust, with only Schedule I, showing account balances that are relatively small I think due to timing of payment of premiums. I am guessing this may be a checking account issue or whose name the checking account is in? Is there a way around this?

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  • 2 weeks later...
Guest morris

1) There may be a terminology problem here. ERISA plans that have more than 100 participants at the beginning of a plan year are required to file Form 5500. If there is no insurance, (ie, self insured) there would be no schedule A's. Claims are paid from general assets.

A company's ERISA welfare plan can have any name it wants as the name of the plan on the 5500 form. They might be calling their ERISA plan "The ABC company flex bene plan". But that doesn't necessarily mean that they are filing a 5500 for the 125 plan itself, which, as you stated, is no longer required.

On the other hand, there is no penalty for filing a 5500 for the 125 plan, and some companies may still be doing it out of ignorance.

2) Trusts do have reporting requirements that are in a different league from the former 125 filing requirements. Do not blend or confuse the two separate concepts.

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There is a lot of confusion regarding the completion and filing of a 5500, so you will see a lot of different things even from similar companies with similar benefits. I would not advise using anyone's 5500 as a guide.

George D. Burns

Cost Reduction Strategies

Burns and Associates, Inc

www.costreductionstrategies.com(under construction)

www.employeebenefitsstrategies.com(under construction)

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  • 7 months later...

I have noticed two things.

1) There are flex bene plans filing 5500s but only submitting the first two pages with no schedules, checking General Assets. Is this still required? I think not as per Notice 2002-24, but then why are they still being filed?

2) There are small flex bene plans filing 5500s checking Trust, with only Schedule I, showing account balances that are relatively small I think due to timing of payment of premiums. I am guessing this may be a checking account issue or whose name the checking account is in? Is there a way around this?

I will attempt to reword my original post above to hopefully convey an improved understanding:

1) Company of over 100 employees offers multiple benefits (all fully insured) and including health spending (fsa) account plan. They have 2 options for filing 5500s- 1. Wrap it all up and file 1 5500 in which case there does not appear to be any specific info on the fsa; or 2. File separate 5500's in which case there will be a 2 page filing for the fsa plan showing 'General Assets' checked off and no other schedules. in this second case is this still required?

2) Company of under 100 employees files 5500 for its FSA and marks off Trust with Schedule I attached. Do you think this is an arrangement required by some of the fsa tpa's, or can the trust component be removed in favor of a checking account in the name of general assets, and no 5500 required anymore?

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The Form 5500 for an FSA is required because it is a health plan. As with other health plans, it may be funded through a section 125 plan.

As an ERISA health plan, it is subject to the ERISA trust requirements. The DOL's limited nonenforcement policy is mostly either misunderstood or disregarded. If done properly, the FSA can be administered through a checking account of the employer.

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