Does a subsidiary have to file a Form 5500 for it's medical welfare be

[Moe Howard]

Parent corp owns 100% of its Subsidiary corp. Both corporations offer their employees medical coverage through pre-tax withholdings. Neither of the corporations offer fully insured coverage. Both corporations have only self-insured medical plans (with employees contributing only a small $amount through pre-tax withholdings). Medical providers file claims directly to the corporate employer and then the corporate employer pays 100% of those claims from its corporate general assets. The pre-tax withholdings from employees is only a nominal $amount.

Parent corp has over 100 participants in its medical plan and therefore the parent's "welfare benefit medical plan" is required to file a Form 5500 each year and have the plan audited by a CPA... plus the parent must file a "fringe benefit Form 5500 & Schedule F", because of pre-tax withholdings.

The subsidiary has less than 100 participants. I realize that the subsudiary must file a "fringe benefit Form 5500 and Schedule F", because of pre-tax withholdings.

MY QUESTION:

Does the Subsidiary's "welfare benefit plan" have to file a Form 5500 just because its parent is required to ??

[Guest hank]

Are there two medical plans or just one (at the parent level)? It seems to me if the parent sponsors one plan and the sub sponsors a different plan, then two filings are required. If it's just one plan and is "co-sponsored" by parent AND sub, only the parent needs to file.

[Moe Howard]

Each corp has its own self-insured medical plan.

My question is ... Does the subsidiary corp have to file a Form 5500 for its "Welfare Benefit Plan" ??

Keep in mind that the subsidiary plan has LESS than 100 participants.

I'm not asking if the subsidiary has to file a Form 5500 for its "fringe benefit plan" ... I know that it has to because there are pre-tax withholdings.

[JohnCheek]

If the parent/sub are a controlled group, then they would be treated as a single employer;

If that single employer has one plan, it needs one filing.

If it has two plans, each plan should determine its filing requirement separately. A welfare plan that is fully insured, fully funded from employers general assets, or a combination of the two, does not have to file if it has less than 100 participants. The participant pretax contributions, as I recall, do not violate this exception.

However, if the plan is funded by means of a trust, it does have to file.

All plans with over 100 participants do have to file.

Note: even though a plan must file the 5500, if the welfare plan is insured and/or unfunded, you should not need Schedule H, and therefore should not require an audit.

Note: you are correct, both plans must file a 5500 and Schedule F if they are providing Section 125 benefits. None of the filing exceptions for welfare plans allows a Section 125 plan to not file.