For many employers, filing Form 5500 feels like crossing the finish line. The filing is prepared, the information is reviewed, the filing is submitted, and the confirmation is received. Time to check it off the compliance calendar, right?
Not quite.
For plans subject to the applicable ERISA requirements, there may be another important step to remember: the Summary Annual Report, or SAR.
The SAR summarizes certain information reported on the plan's annual Form 5500 filing. While the Form 5500 provides detailed information to the government, the SAR is designed to provide participants and beneficiaries with a more accessible summary of the plan's annual report. In other words, the Form 5500 and the SAR serve two different purposes. One is filed with the government, while the other is provided to the individuals covered by the applicable ERISA requirements.
And this is an important distinction: filing the Form 5500 does not automatically satisfy the SAR distribution requirement. An employer can successfully file its Form 5500 and still have a separate obligation to distribute the SAR.
When Does the SAR Need to Be Distributed?
Generally, the SAR must be distributed within nine months after the end of the plan year. For a calendar year plan, that typically means the SAR is due by September 30. If the plan receives an extension to file its Form 5500, the SAR deadline is generally extended as well.
This is why the SAR should be part of the employer's Form 5500 process from the beginning. Once the filing is complete, the employer should also consider who needs to receive the SAR, how it will be distributed, and how the distribution will be documented.
Who Gets the SAR?
This is another area where employers can make assumptions. The distribution requirement isn't necessarily as simple as sending the SAR to everyone who is currently employed. Employers should consider who is entitled to receive the disclosure under applicable ERISA requirements, which may include certain former participants and beneficiaries.
In other words, don't automatically equate "employees" with "SAR recipients." Determine the appropriate distribution population based on the plan and applicable requirements.
Why Does the SAR Matter?
ERISA isn't just about reporting information to the government. It also includes requirements designed to keep participants informed about their benefit plans. The SAR is part of that participant communication process.
The SAR gives participants a summary of information reported through the Form 5500 process without requiring them to navigate the full filing themselves. It provides another layer of transparency and helps fulfill the plan's participant disclosure obligations.
One of the most common misconceptions is, "We filed the 5500, so we're done." While filing the Form 5500 is certainly an important part of the process, the filing and the SAR are separate requirements. Sending the Form 5500 to the government does not replace the obligation to provide the applicable SAR to participants and beneficiaries.
Employers should also avoid assuming that the SAR can simply be replaced by sending everyone a copy of the Form 5500. The SAR is a separate disclosure specifically designed to summarize the information reported in the annual filing.
Don't Let the SAR Be the Forgotten Step
The Form 5500 tends to get most of the attention because there is a hard filing deadline and a lot of moving pieces involved in preparing it. The SAR can be easier to overlook because it comes after the filing.
But compliance doesn't end when the Form 5500 is submitted.
A good Form 5500 process should include not only preparing and filing the Form 5500, but also identifying the applicable participant disclosure requirements and making sure those requirements are addressed.
So the next time someone says, "The 5500 is done!", it might be worth asking one more question:
"Great...but did we remember the SAR?"
Because when it comes to Form 5500 compliance, filing the form may be the finish line, but the SAR is the follow-through.
