Missing a 401k plan audit deadline can be a costly error for a company. But, with the right 401k plan knowledge and benefit audit preparation, it’s easy to stay on top of these essential deadlines. To help you keep track of these key dates and avoid expensive penalties, let’s discuss the two most crucial benefit audit filing deadlines for plan sponsors.
Form 5500 Filing Deadline
The most critical deadline for employee benefit plan audit sponsors is the annual filing date of Form 5500 with the Department of Labor (DOL). Form 5500 contains comprehensive details regarding an employee benefit plan (EBP) or 401(k) plan’s operations, qualifications, and financial condition. It provides the DOL and Internal Revenue Service (IRS) information about the program’s operation and if it complies with government regulations.
When is the benefit audit filing deadline?
The filing date is the last day of the 7th month following the end of a plan year. For plans whose fiscal year is a typical calendar year (i.e. ending December 31st), the deadline for filing Form 5500 is July 31st of each year.
What are the penalties for late filing?
Failure to file Form 5500 can lead to significant penalties. The SECURE Act has increased the late filing to a civil penalty of $250 per day that Form 5500 is late up to $150,000. In addition, the DOL can charge a fine of up to $2,233 per day to a company for failing to file Form 5500. These fines can add up quickly and result in a significant financial burden for the plan and plan sponsor.
Benefit Audit: Extension Deadline
If the plan sponsor or administrator is unable to file Form 5500 by the July 31st deadline, they can request an extension using Form 5558. This form needs to be submitted on or before the Form 5500 due date (July 31st). So long as Form 5558 is submitted by then, the extension will automatically apply—no DOL or IRS approval is required.
When is the extension filing deadline?
The extension will grant the plan sponsor an additional 2.5 months to file Form 5500 with the DOL, which means they will have until October 15th to file for a December 31st plan yearend. It’s essential to note that this extension isn’t indefinite, and the plan sponsor must still file Form 5500 on or before October 15th, or they will be out of compliance.
How does an extension affect unpaid tax payments?
While filing an extension provides a company more time to file Form 5500, it does not provide additional time to pay any taxes that may be due. Therefore, plan sponsors should make sure to pay any taxes owed by the original filing deadline of July 31st.
Prepare for Your Next Benefit Audit
We know the challenges of plan management, which is why you need a CPA firm you can rely on to complete a low-stress and timely retirement plan audit. As a member of the AICPA Employee Benefit Plan Audit Quality Center for CPA firms, we strive for the highest quality auditing standards in employee benefit plan audits.
Contact us today to help ensure that your company remains compliant and meets all deadlines.
