The Form 5500 small plan exemption: who does not file and what is still required.
Many small employers do not have to file a Form 5500, but the exemption is narrower than it sounds. This page explains the test and the paperwork that still applies. It is general information, not legal or tax advice.
Three things to know first.
Fewer Than 100 Participants
A welfare plan with fewer than 100 participants at the start of the plan year that is fully insured, unfunded, or a combination of the two does not have to file. To check whether your plan files and when, use our Form 5500 filing calculator.
The Exemption Covers The Filing Only
The plan document and the summary plan description are still required. A carrier booklet or benefits guide is not a substitute for either one.
The Count Is Taken On Day One
Participants include covered employees, COBRA participants and covered retirees, but not dependents. The count is taken at the start of each plan year.
Three steps to take next.
Count Your Participants
Count employees, COBRA participants and covered retirees on the first day of the plan year, and write the number down for the file.
Confirm How The Plan Is Funded
Check that the plan is fully insured or unfunded. A plan paid through a trust is not treated as unfunded, and a change in funding can change the answer.
Put The Documents In Place
Make sure there is a plan document and a summary plan description that match what you actually offer.
Three questions to ask first.
Did We Count COBRA And Retirees?
Ask whether COBRA participants and covered retirees were included in the count.
Is Anything Held In A Trust?
Ask whether any employee contributions or plan assets are held in a trust.
Do We Have A Plan Document And SPD?
Ask to see both documents, and the date each one was last updated.
Where these figures come from.
29 CFR 2520.104-20: Small Welfare Plan Exemption
The fewer than 100 participants test, the insured and unfunded structures, and the continuing summary plan description duty.
The Small-Plan Exemption: The Detail
Many small welfare plans do not need to file a Form 5500. The exemption has conditions that are easy to overlook.
Under 100 Participants at the Start of the Year
The exemption applies to welfare plans with fewer than 100 participants at the beginning of the plan year. Count participants on the first day of the plan year, not at year end. Because the count is a snapshot, record it each year so the filing decision rests on a documented number, and confirm borderline cases with your filing professional.
Funding Method Matters
The plan must be fully insured, unfunded, or a combination of the two. A plan that holds employee contributions in a trust does not qualify. Because the answer depends on how the plan is funded and how contributions are handled, review the arrangement with your adviser each year. A change in funding can change the filing status, even when headcount stays the same.
The 80 to 120 Participant Rule
A plan with 80 to 120 participants may file the same type of return as the prior year, which can keep a plan in the small category through modest growth. Growth near the upper end is worth watching early, so the filing path is chosen deliberately instead of discovered at the deadline. Check how the current rule applies to your plan with your filing professional or counsel.
Exempt Does Not Mean Unregulated
ERISA duties still apply, including a written plan document, a summary plan description, and fiduciary responsibilities. Treat the exemption as relief from a filing, not from the plan’s obligations. Keep the plan document current, make sure employees receive the summary description, and have counsel confirm how fiduciary duties apply to your plan.
Common Questions About the Small-Plan Exemption
Which plans qualify for the exemption?
Welfare benefit plans with fewer than 100 participants at the beginning of the plan year that are fully insured, unfunded, or both.
Does it cover retirement plans?
No. Retirement plans have their own Form 5500 rules, including Form 5500-SF or 5500-EZ for some.
What counts as a participant?
Generally, active employees covered by the plan and former employees with benefits still due. Count carefully at the beginning of the plan year.
What if we cross 100 participants?
Then you file starting with that plan year, subject to the 80 to 120 rule.
What is an unfunded plan?
One paid from the employer’s general assets, with benefits not paid from a trust.
Does a cafeteria plan qualify?
Often yes if it is funded only through payroll reduction and employer general assets, but the facts matter. We can review yours.
What if we are exempt but still want to file?
Voluntary filing is not required. Most exempt plans do not file.
Do we still need a plan document?
Yes. ERISA requires a written plan document and a summary plan description whether or not a Form 5500 is required.
How can we confirm our status?
Send us the plan list, the participant counts, and how each benefit is funded. We will confirm which plans file and which are exempt.
Related reading: Form 5500 Extension and Form 5558 · SMM and SAR Deadlines for Employer Health Plans
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