Article Plan: Schedule H Form 5500 Instructions

Understanding the Schedule H for Form 5500 is crucial for employers and plan administrators responsible for filing annual reports for employee benefit plans. This section provides a detailed overview of the Schedule H instructions, focusing on its purpose, structure, and key components to ensure compliance with IRS and DOL requirements.

Overview of Schedule H

The Schedule H is a critical component of the Form 5500 series, specifically designed for large employee benefit plans. It is used to report detailed financial information, including plan assets, liabilities, income, and expenses. The schedule is divided into several parts, each addressing specific aspects of the plan’s financial health.

Who Must File Schedule H?

Not all plans are required to file Schedule H. Generally, it is mandatory for:

• Large pension benefit plans covering 100 or more participants at the beginning of the plan year.
• Large welfare benefit plans covering 100 or more participants at the beginning of the plan year.
• Certain Direct Filing Entities (DFEs) as defined by the IRS.

Plans that file Form 5500-SF instead of Form 5500 are not required to attach Schedule H. However, they must still report financial information relevant to their plan size and type.

Key Components of Schedule H

Schedule H is structured to provide a comprehensive financial overview of the plan. The following sections are included:

Part I: Financial Statement

This section requires detailed reporting of the plan’s assets, liabilities, and net assets. Assets are categorized into investments such as stocks, bonds, and real estate, as well as other holdings like loans and receivables. Liabilities include any debts or obligations the plan may have.

Part II: Income and Expenses

This part focuses on the plan’s income and expenses during the plan year. Income sources include employer contributions, employee contributions, and investment income. Expenses are categorized into administrative expenses, benefits paid to participants, and other deductions.

Part III: Accountant’s Opinion

If the plan is required to have an independent qualified public accountant’s opinion, this section must be completed. It includes whether the opinion is attached, the type of audit performed, and any qualifications or adverse opinions.

Part IV: Additional Information

This section provides space for any additional information or explanations that may be relevant to the plan’s financial status. It is often used to clarify unusual transactions or significant changes in the plan’s financial position.

Important Instructions for Completing Schedule H

The IRS provides specific instructions for each line and section of Schedule H. Some key points to note include:

• Accuracy is critical: All financial figures must be reported accurately, as they are subject to audit.
• Consistency matters: Ensure that all information aligns with the main Form 5500 and other attached schedules.
• Timely filing: The completed Schedule H must be attached to the Form 5500 and filed by the last day of the 7th month following the plan year.
• Electronic filing: Most plans are required to file electronically using the EFAST2 system.

Common Mistakes to Avoid

When completing Schedule H, it is essential to avoid common pitfalls that could lead to delays or penalties:

• Incomplete information: Ensure all required fields are filled out thoroughly.
• Mathematical errors: Double-check all calculations to avoid discrepancies.
• Missing signatures: Ensure all required signatures are included, especially for audited plans.
• Missed deadlines: Plan ahead to meet the filing deadline, as extensions are limited.

By carefully following the Schedule H instructions and paying attention to these key components, plan sponsors can ensure compliance with regulatory requirements and maintain accurate financial records for their employee benefit plans.