5500 clarification

[Guest Melissa Winslow]

I have a Section 125 plan filer. The plan allows participants to defer a portion of their salary to cover 25% of medical insurance premiums not paid for by the plan sponsor. The Schedule F filing is straight forward. However, I am not certain about the 5500 filing itself.

The plan had about 140 participants at the beginning of 1999. The sponsor remits all premiums (the 75% paid by the sponsor and the 25% paid by the participant) directly to the insurance carrier thus, an unfunded plan. No VEBA exists. If I understand the 5500 directions properly, I need to file two (2) 5500's since the plan had greater than 100 participants at the beginning of the plan year. One for the premiums covered under the 125 plan (including Sch F) and one for the 75% paid for by the sponsor - yes?

[Dawn Hafner]

I agree. You need two 5500s. One for the health insurance benefit (welfare plan) and one for the cafeteria benefit (fringe). On Sch F I would report only the 25% premiums, although there are some people that report all of the premiums. The instructions clearly state contributions "under the cafeteria plan" and the 75% has nothing to do with the cafeteria plan. Note that if your cafeteria plan and health insurance plan are contained in one docuemnt you may file one combined 5500.

[Guest Melissa Winslow]

Thanks for the information....

RE: the 5500 for the health insurance benefit - could I reasonably expect that the insurance carrier to have issued the required Schedule A information to the sponsor?

Also, is there any rational for needing to report the 75% piece to the government since this is a premium only plan?

[Guest RBeck]

do you have two plans or one? 5500s are filed for each plan, not each type of benefit under the plan. If you have one plan, you file Form 5500 and Sch F for the cafeteria portion, and Schedule A for the welfare benefit portion, if insurance contracts are involved. If there are no insurance contracts, include both the employee and employer cost of the plan on Schedule F.

[Guest Dick Boever]

On page 3 of the General Instructions to Form 5500 it states "Fringe benefit plans are often associated with one or more welfare plans. A single Form 5500 may be filed for the fringe benefit plan and an associated welfare plan if all the required information is completed for both plans."

Page 7 of the instructions tell you what is required to be reported for the Welfare Benefit Plan and Page 8 gives further guidance for the Fringe Benefit Plan and the combined filing.

The plan you described is ideally suited for a one Form 5500 filing.

[JWK]

On the Schedule A...

Section 103(a)(2) of ERISA states:

"If some or all of the information necessary to enable the administrator to comply with the requirements of this title [which includes the 5500 requirement] is maintained by * * * an insurance carrier * * *, such carrier * * * shall transimit and certify the accuracy of such information to the administrator within 120 days after the end of the plan year."

So, yes, it is reasonable to expect the insurance company to automatically provide the Schedule A information to the plan administrator in time for the plan administrator to file the 5500.

[Guest Ed F]

I agree with Dick. One 5500 for the welfare benefit plan, with a Schedule F to deal with the cafeteria plan, and the appropriate number of Schedules A. If the cafeteria plan has a medical FSA the answer appears to be different. Then it appears you might need a 5500 for the welfare benefit plan, and a second 5500 with Schedule F for the medical FSA and the cafeteria plan.

[Guest Lee Ann Jenkins]

I thought you filed 5500s by ERISA Plan Number. Please clarify, anybody.