What are Form 5500’s fiduciary-responsibility questions?

The forms for an employee-benefit plan’s annual report ask questions designed to check some points about whether the plan’s fiduciaries meet their responsibility.

Imagine a recordkeeper, third-party administrator, auditor, or other service provider now is thinking about a value-add for next year’s 5500 services.

The idea: List all Form 5500, including Schedules, queries that ask something for which a report’s reader could use the response to detect or suspect a possible breach of a fiduciary’s responsibility. (Not a tax-qualification failure, unless it also involves some other breach of an ERISA fiduciary responsibility.)

https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500

Isolating those Form 5500 queries in one list would aid a service provider’s review to spot responses that could lead to government or private enforcement.

Let’s crowd-source the list, with each BenefitsLink neighbor noting one query. Don’t repeat a query already noted. Quicker responders might note the obvious queries; later responders are challenged to find more subtle queries. If enough of us add one item, we’ll collect a complete list.

I volunteer to assemble the whole list, in a table format—with Form or Schedule, part, and line numbers; the query; and an explanation.

I don't have any input because I haven't done 5500s in years, but found this interesting given something I read earlier in the week.

https://www.napa-net.org/news/2025/10/talking-points-things-that-make-me-mad-as-hell--part-2/?utm_source=MagnetMail&utm_medium=email&utm_term=kprell%40bpas.com&utm_content=COM_NAPA_eNews_10.21.2025_Daily_Tues&utm_campaign=Hopes%2C Fears for Middle Class Retirement Prospects

Scroll down to this header. One of Nevin's pet peeves is people using 5500 data to manufacture compliance scares. 

Data “analysis” that takes real stuff, combines it with fake stuff, makes up a new scary-sounding name for it, and then claiming that vast majorities of all the retirement plans in existence are in “violation.” 

Certainly there are compliance issues and some clear red flags that can pop up on a 5500 filing, but someone could take many questions and say a certain answer might mean there is some obscure issue, not to mention those questions that require a yes or no answer when NA should be the logical answer and for which any answer could be deemed suspect, i.e., "have you stopped beating your wife?"

Statistics/data analysis can be skewed to serve the presenters agenda. 

Peter, I'm not questioning your intent, just saying our forum should exercise caution and not create a lot of smoke where there is no fire.

I’m familiar with Nevin’s views on many topics, including his recent things-that-make-me-mad lists. Especially his observations about illogical or intemperate extrapolations and observations.

Rather, I’m thinking about stuff that might lead an EBSA employee to think it’s worthwhile to start an EBSA investigation, or at least an inquiry.

And I’m not thinking about queries that might lead to a subtle point, but rather those that can suggest a realistic possibility of a breach.

For example:

late contributions?

Did the plan have any non-cash contributions?

Did the plan fail to provide required blackout disclosures?

Did the plan have any (nonexempt) reportable transactions?

Is the plan covered by fidelity-bond insurance?

My time since I last regularly advised a Form 5500 work group likely is longer than yours. But I remember how often a customer furnished for the service provider’s assembly responses that were factually wrong for the question asked. And often perversely so, suggesting a possible violation or breach when none there was.

I suggest there’s an opportunity for service providers to do a value-add for customers, especially those that administer small plans.

And guarding against unconsidered responses to a Form 5500 query might help service providers too.

(I don’t intend anything that would aid those who sell to fear, or exploiting perceived or even actual weaknesses in a retirement plan’s administration.)

Thanks for the clarification and I agree those listed items are red flags for audits.

I would add that reporting the correct participant counts is important.  I have had some takeover plans where the counts on the 5500 were just under 120 to avoid the audit requirements when our review shows that the number of participants at EOY should definitely have been higher than what was reported.

Stepping back a little, it's important to keep in mind that the purpose of the 5500 is for the agencies to fulfill their obligation to provide oversight of ERISA plans. In the words of the Troubleshooters Guide To Filing ERISA Annual Reports, "The information in the [5500] annual report is carefully reviewed by the DOL, IRS, and PBGC for compliance
with applicable reporting requirements and used for enforcement, compliance assistance, research and other purposes."

Generally, the DOL, IRS and PBGC each year contribute additions to the form or request removal of existing items depending upon each agency's strategic plans and more specifically each agency's initiatives to assess topics that may require providing additional guidance.  The ebb and flow of these areas of focus is reflected in the periodic changes in the forms.

That being said, the information collected on the form has value for purposes of enforcement.  The agencies commonly announce as part of their annual operating or strategic plans, topics that will be subject to scrutiny.  Plan sponsors and service providers need to "read the tea leaves" and anticipate whether a plan likely has a compliance or operational issue that warrants added attention before the plan receives a love letter from an agency.

The agencies have published the edits that applied to the information provided on the Form 5500, and most 5500 software developers have integrated these edits into their products.  Notably, the edits vary from a full stop or failure of the filing to warnings and observations of possible concerns.

The market place also demonstrates the value of the information collected to mine for prospective clients that fit a service provider's targeted profile.  Those who sell to fear, or exploiting perceived or even actual weaknesses in a retirement plan’s administration will not hesitate to leverage this information, including sounding alarms over issues that do not exist for a plan.

Ideally, reputable service providers will incorporate into their operations and more specifically into the 5500 process a review of key indicators of operational and compliance issues, and inform the plan sponsor and plan administrator.

The ability of anyone to download historical 5500s makes it easy to gather information about a plan and identify indicators of operational issues and trends towards noncompliance. 

One particularly valuable exercise for large plans is to compare the contents of the audit report to the information provided on the form.  There are far too many to list in a single post, but here are some examples:

• Does the description of the plan features in the audit report match the plan characteristic codes?
• Does the audit report describe events like corporate events that could cause fluctuations in participant counts which in turn could flag a change in audit requirements or possibly a partial plan termination?
• Are there any assets listed in the audit report that are known to cause operational headaches (real estate, art, life insurance...)?
• Is the disclosure of late deferrals consistent with the response to the question on the form about late deferrals, and are late deferrals a persistent problem?
• Is there an indication that the plan sponsor is part of a controlled group, but there is no indication that coverage testing across the controlled group was reviewed?
• Are there "Other" contributions reported without some explanation of what they are?
• Was there a a change in service provider that was disclosable on Schedule C, but was not disclosed?
• .... and the list goes on.

All of this having been said, it will not be a reach to have the industry and the agencies dump all of the historical 5500 data files and audit reports into a single data source and use AI to identify the interrelationships among the data elements collected on the forms.