Is a 5500 required (small self-insured medical plan that receives employee contributions).

[Moe Howard]

Medical plan is self-insured. It has only 5 participants. Monthy $amounts are withheld from each participant's salary ... which are kept in employer's checking account to help pay future medical bills for participants. The withholdings are small compared to the medical bills that the employer pays.

I would think that the plan has to file a 5500 for this welfare benefit plan, because although the plan has fewer than 100 participants ... the plan is NOT unfunded.

According to 5500 instructions ... "NOT unfunded" also means when the plan receives contributions from participants.

It is just hard for me to believe that ERISA requires a medical plan with just 5 participants to file a 5500, no matter what the circumstances are. What am I missing here ?

How can the plan prepare/file a Schedule I, if the plan has no assets? The medical bills are paid directly from the employer's checking account.

[E as in ERISA]

Are they pretax contributions through a cafeteria plan? The DOL has a non-enforcement policy -- from about 1993 or so -- where it doesn't enforce the trust or audit requirement for plans with pretax contributions.

[E as in ERISA]

http://www.dol.gov/ebsa/Newsroom/tr92-01.html

[Moe Howard]

Katherine, thanks, but do you know if a 5500 is required? If not, then why not? What exeption does this plan meet that exempts it from having to file a 5500?

[Guest anonymous coward]

Re: Technical Release 92-01

Here is the reasoning for this type of situation that has been explained to me by several people in EBSA.

If the plan in question complies with T.R. 92-01, then the DOL views that plan as still unfunded/fully-insured (depending on arrangement)--hence no filing required if under 100 participants at the beginning of the year.

The non-enforcement principle of the "trust" requirement for those employee contributions applies as long as the employee contributions are made in a pre-tax witholding manner. The DOL's opinion being that if the contributions are done under the cafeteria plan, then they do not constitute "employee" contributions--they are treated as "employer" contributions. Hence, no plan asset segregation, or trust requirement.

Sorry, little hopped up on coffee (been that kind of day), those more experienced in the finer art of Jargon I'm sure can clarify this explanation. My .02