It seems that many companies are not taking the 5500 filing process seriously, at least as it relates to their Health and Welfare plans, with studies showing noncompliance at a minimum of 29%. Why is it that when the Department of Labor (DOL) can assess heavy penalties for noncompliance, many companies chose to ignore these plans? Under ERISA Section 502, the DOL may assess a civil penalty against a plan administrator of up to $1,100 per day starting from the date of the administrator's failure or refusal to file the Form 5500 and in recent years the DOL has increased random audits of all plans.
Top 5 Reasons to Hire a Professional to Prepare your 5500s:
- Core Competency - Form 5500 Preparation is not core to a company's business and most find their employees lack the specific expertise to prepare them. Freed from devoting energy to areas that are not in its expertise and wasting time performing a function out of their realm, the company can utilize internal resources more efficiently.
- Cost Savings - While the specific costs of outsourcing may appear to be higher than doing it yourself, the end result may be higher if the 5500 needs to be amended, there is a Department of Labor (DOL) inquiry, or worse yet, a DOL audit. All of these will add up to be much higher than the initial cost of outsourcing and having it done right the first time around. Did you know that information gleaned from 5500's is one of the top four triggers of an Employee Benefits Security Administration (EBSA) investigation?
- Access to Specialized Skills - ERISA is a very technical federal law and as a plan sponsor, complying with it is of paramount importance. Since this return is only filed once a year, how long does it take your employees to research questions or correctly complete the form? Leverage the knowledge and skills of a professional that prepares 5500's on a daily basis. Gain insight and value.
- Consistency and Reliability - Do you view the 5500 filing as a "necessary evil" of providing benefits to your employees? Does the 5500 usually get put on extension and then get filed at the very last minute? Is it prepared by a different person every year or have you forgotten to file in the past? Outsourcing can minimize the impact of employee turnover when you have a reliable company that is responsible for the filing from year-to-year.
- Mitigate Your Risk - Every year the DOL sends out thousands of notices and rejections for errors and common mistakes in the 5500 forms. Hiring an experienced professional substantially reduces the possibility of having your filing rejected or receiving a notice.
For more information, visit my website: www.5500PrepPro.com
