Every year, most 401(k) plan sponsors get a Form 5500 from their TPA or other provider with instructions to electronically sign and file it.<\/p>\n
And I\u2019m convinced plenty of plan sponsors spend more time deciding what they want for lunch than reviewing the Form 5500 before signing it.<\/p>\n
That\u2019s a mistake.<\/p>\n
Your Form 5500 isn\u2019t the terms and conditions for an iPhone software update. When you sign it, you\u2019re signing a government filing containing information about your retirement plan. You should have some idea what it says.<\/p>\n
I\u2019m not suggesting that every plan sponsor needs to become a Form 5500 expert. That\u2019s why you hire professionals. But you should review the basic information. Does the number of participants look right? Do the plan assets make sense? Are contributions reasonable? Is the employer information correct? If an audit is required, is it attached?<\/p>\n
Most importantly, if something doesn\u2019t look right, ask.<\/p>\n
I\u2019ve been practicing ERISA law long enough to know that mistakes happen. Good TPAs make mistakes. Good recordkeepers make mistakes. Sometimes incorrect information was supplied by the plan sponsor in the first place.<\/p>\n
The problem is that once an incorrect Form 5500 is filed, the government doesn\u2019t really care that you didn\u2019t prepare it.<\/p>\n
You signed it.<\/p>\n
A Form 5500 can also be a great annual checkup for your plan. Comparing this year\u2019s filing with last year\u2019s can uncover changes or inconsistencies that deserve an explanation.<\/p>\n
Your providers should prepare the filing and help you understand it, but the plan sponsor still has responsibility.<\/p>\n
So when that Form 5500 arrives in your inbox, don\u2019t blindly click through the electronic signature process.<\/p>\n
Take ten minutes and look at it.<\/p>\n
Ten minutes today might save you a much longer conversation with the IRS or Department of Labor tomorrow.<\/p>\n
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