Form 5500 Filing and Your Employee Benefit Plan Audit: What You Need to Know

If your retirement plan has 100 or more participants with account balances at the start of the plan year, you need to file Form 5500 with an independent audit attached. Large welfare plans funded through a trust face the audit requirement, too. Getting either piece wrong can cost you, with civil penalties from the Department of Labor (DOL) running up to $2,739 per day for late filings in 2026.

Form 5500 is the annual report most plans covered by the Employee Retirement Income Security Act (ERISA) submit to the IRS, DOL, and Pension Benefit Guaranty Corporation (PBGC). The audit attached to it gives regulators, participants, and trustees confidence that the numbers reflect reality. Plan sponsors who handle both as a single, coordinated process tend to file cleanly, meet their deadlines, and avoid unwanted attention from federal regulators.

What is Form 5500, and Who is Required to File?

Form 5500 is the disclosure tool ERISA uses to keep employee benefit plans transparent. Sponsors of pension, 401(k), profit-sharing, employee stock ownership plan (ESOP), and many health and welfare plans are required to file annually. Smaller plans may qualify for the simplified Form 5500-SF, while one-participant plans use Form 5500-EZ. Filing happens electronically through the EFAST2 system, and most filings become public record once accepted.

When Does Form 5500 Filing Require Audited Financial Statements?

Plans that cover 100 or more participants with account balances at the beginning of the plan year are generally classified as “large plans” and must include financial statements audited by an independent qualified public accountant with their Form 5500. Following changes that took effect for the 2023 plan year, the count is now based on participants with balances rather than all eligible employees, which has reduced audit obligations for some sponsors. An 80-120 rule also lets plans hovering near the threshold maintain their prior filing status under certain conditions.

Key Deadlines and Penalties to Track

Form 5500 is due seven months after the plan year ends, which means July 31 for calendar-year plans. A Form 5558 extension pushes the deadline to October 15. Late filings without an approved extension are expensive, and the Delinquent Filer Voluntary Compliance Program offers reduced penalties for sponsors who self-correct before being contacted by the DOL. Skipping the program and waiting for an inquiry rarely ends well.

Common Form 5500 Mistakes That Can Trigger Agency Scrutiny

Most filing problems trace back to a handful of recurring issues. The IRS, DOL, and PBGC all review Form 5500 filings, and any of them can send notices when something looks off. Catching errors early is far easier than responding to a federal notice after the fact.

Incorrect or Outdated Participant Counts

Participant counts drive whether an audit is required, so errors here can either trigger an unnecessary audit or, worse, cause a sponsor to skip a required one. Census data from the prior year-end should be reconciled against payroll and recordkeeper reports.

Missing or Incomplete Audit Attachments

Large plan filings submitted without the auditor’s report are treated as incomplete and typically draw a Notice of Rejection from the DOL within months. Even when the audit is complete, formatting errors or omitted schedules can cause EFAST2 to reject the submission outright.

Inconsistencies Between Plan Documents and Reported Data

The plan document, summary plan description, and Form 5500 entries should tell the same story. Mismatched eligibility provisions, vesting schedules, or fidelity bond amounts invite questions.

Errors on Schedule H or Schedule C

Schedule H reports financial information for large plans, and Schedule C discloses service provider compensation. Misclassifying assets, omitting indirect compensation, or inconsistent prior-year comparatives are among the most frequently corrected errors.

How the Audit Process Supports Accurate Form 5500 Filing

A well-run employee benefit plan audit catches Form 5500 errors before they reach regulators. Auditors test participant data, verify contributions and distributions, evaluate the plan sponsor’s internal controls, review the recordkeeper’s SOC report, and confirm that financial statements agree with what the filing reports. When the audit team and the filer coordinate early, schedules tie out, footnotes match disclosures, and questions get resolved while there’s still time to fix them. The audit becomes a quality check on the filing rather than a separate exercise that creates last-minute surprises.

Partner with Insero for Your Employee Benefit Plan Audit

Plan sponsors deserve an audit team that understands both the technical requirements and the practical pressures of getting Form 5500 submitted on time. Insero’s employee benefit plan audit team is a dedicated group within our Audit Division, ranking in the top 1% of EBP accounting firms in the United States based on plan assets audited. We currently serve more than 200 benefit plans across 30+ states, with experience spanning defined contribution, defined benefit, and health and welfare plans funded through VEBA trusts. We can also assist with the Form 5500 filing itself. As a member of the AICPA Employee Benefit Plan Audit Quality Center, we stay ahead of evolving DOL requirements so you can be confident your filing is compliant.

Schedule a consultation today to see how we can support your next plan audit and Form 5500 filing.

References:

• www.irs.gov/retirement-plans/form-5500-corner
• https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500
• www.dol.gov/general/topic/retirement/erisa
• www.usa.gov/agencies/pension-benefit-guaranty-corporation
• www.efast.dol.gov/welcome.html
• www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/dfvcp
• www.aicpa-cima.com/resources/toolkit/ebp-soc-1-reports-and-service-organizations