What is the Difference between Forms 5500, 5500-SF, and 5500-EZ?

Employers and business owners have to submit various forms while establishing their business, and one type of form they’ll need to fill is for employee pension and welfare plans.

These forms fall under the Form 5500s category. There are three types of 5500s – Form 5500, 5500-SF, and the 5500-EZ. The purpose of each form is the same, but the main difference lies in the number of people covered by each form.

Employers must file and submit all the forms. These forms are an Annual Report of the year’s employee plans. If there are numerous plans, the employer must submit a form for each plan. Now, Form 5500 covers plans with over a hundred participants. On the other hand, 5500-SF covers plans with one or less than 100 participants. Lastly, Form 5500-EZ covers a plan that only has a single participant.

You can note other differences between the forms when comparing the instructions available on the IRS website. These instructions go into detail and are different for each form and lay down essential guidelines that make it easier to understand for employers who are new to the process. You can use Form 5500 and 5500-SF for employees’ pension and welfare benefit plans, whether they are more or less than a hundred. Meanwhile, employers can only file Form 5500-EZ for a one-participant or foreign pension benefit plan and not a welfare benefit plan.

Completing the Form

Employers or business owners who have no employees usually file form 5500-EZ. The plan covers them and their spouses. Employers filing 5500-SF or 5500-EZ forms can file one-participant plans, but the difference is that while they have to complete Form 5500-SF electronically, they have to fill 5500-EZ manually and submit it to the Internal Revenue Service. This means that employers who aren’t particularly tech-savvy can choose to fill the 5500-EZ if they have trouble filling in the 5500-SF.

Employers have to give in more information than they need for other forms. Forms that employers can file electronically, like the 5500 and 5500-SF, are available for the public to see online, making them more easily accessible. Meanwhile, employers who intend to register their plan through the 5500-EZ will have to get a paper copy from the IRS.

The 5500-EZ and 5500-SF for Foreign Plans

Another way that the 5500-EZ is different from other plans is because it covers foreign plans that require an annual report. Since employers cannot file for foreign plans that require yearly information through the Form 5500, but through the 5500-SF, employers choose 5500-EZ so that they don’t have to do it electronically.

The 5500-EZ is also preferable for foreign and one-participant plans that do not fall under the regulation of ERISA and its section 104(a). Employers who choose to file their foreign or one-participant plans through the 5500-SF do so to meet the filing and annual reporting regulations that the Code imposes.

Meanwhile, employers don’t have to file a Form 5500 for foreign pension plans based outside the United States. A foreign plan, in this case, is a pension or benefit plan which is maintained outside the territory of the United States for non-residents. Unless a foreign plan doesn’t meet particular criteria, submitting an annual report is mandatory.

This means that an employer will have to file a yearly report for a foreign plan if h/she is a domestic employer or foreign but with income derived from sources present inside the United States. These sources can include foreign subsidiaries of domestic companies.

Exemptions for the Plans

While the exemptions of forms 5500 and 5500-SF are pretty similar, those of 5500-EZ are different. This is because the form serves another purpose. There are specific one-participant plans for which employers don’t have to file a 5500-EZ. This is when all of one plan’s assets and those of other one-participant plans the owner maintains are less than $250,000 and do not exceed the value. Unless the year you intend to file for is the plan’s final year, it’s exempted from the 5500-EZ.

These are some of the most crucial differences between the Forms 5500, 5500-SF, and 5500-EZ that allow employers to understand which one they are required to file.

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