Welfare plans exceed 100 participants for a couple of years

[katieinny]

A company sponsors several types of welfare benefit plans (health, LTD, life & ADD, group travel and accident and a cafeteria plan). They have typically been under the 100 participant limit for filing 5500s, but some of the plans did go over 100 participants during some years, then back down again. I can see that determining which plans went over the 100 mark, in which years, is going to be quite a hodge-podge.

I was told by another practitioner that there is much less concern at the EBSA about 5500 filings for welfare plans than qualified plans. She suggested that we not try to go back and figure out which plans should have filed for which years, but start being vigilant now, on a going forward basis.

I was wondering if some of you have had a similar experience and how you handled it.

[J Simmons]

That sounds risky to me given how quickly those daily penalties can mount up, and how inexpensive the penalty can be when voluntarily filing late.

Does the company really have that many different welfare benefit plans, or just one plan that sports those various benefits? The question might sound strange, but the metaphysics of what is a 'plan' could help you out somewhat. Depending on the documentation of these benefits, the verbiage used in the summaries, the sign-up forms used and whether different three-digit numbers have been assigned to each one, you might have a single plan or two, with a variety of features. Since you haven't already filed Forms 5500, you might be able reasonably to cast the situation as just one or two, and just prepare and file late Forms 5500 (and pay penalties) for such. This would also make the Form 5500 burden in the future a bit easier.

I think you definitely need to hire ERISA counsel and see what you can do. There's just too much at stake in those daily late penalties to pin all your hopes on EBSA not looking that close at annual reports for welfare plans.

[katieinny]

J: Thanks for your reply. I was hoping some of these plans could be combined, too. But it seems the company has different documents, and different plan numbers assigned to each one. I also think that 5500s were filed many years ago -- perhaps before the under 100 participant rule went into effect. This is going to take some time to sort out.

[Guest taxesquire]

J: Thanks for your reply. I was hoping some of these plans could be combined, too. But it seems the company has different documents, and different plan numbers assigned to each one. I also think that 5500s were filed many years ago -- perhaps before the under 100 participant rule went into effect. This is going to take some time to sort out.

remember, there is a rule that provides that a plan with under 100 participants in most years does not have to file for the 1 year they reach over 100 participants. I bet the instructions provide some specificity on this.

Also remember, if there are separate plans - in particular, if the medical insurance is broken up into multiple plans - the participants in those plans are counted separately so you're less likely to reach the 100 participant mark.