How Does IRS Notice 2002-24 Affect My Form 5500 Filing Requirements?

Briefing

The Internal Revenue Service announced on April 5, 2002, that employers maintaining specified fringe benefit plans are relieved from the requirement to file annual information returns (Schedule F) attached to a completed Form 5500 under the Internal Revenue Code. The fringe benefit plans specified by IRS Notice 2002-24 are Sections 125 (flexible benefit or “cafeteria” plans), 127 (educational assistance programs) or 137 (adoption assistance programs). This notice was effective upon publication and applies to all plan years for which Form 5500s have not been filed. Any future reporting obligations under Internal Revenue Code Section 6039D will apply only to plan years beginning on or after the date of publication of further guidance.

NOTE: The IRS suspension does not affect any annual reporting requirements under the Employee Retirement Income Security Act of 1974 (ERISA). Requirements under ERISA to file a Form 5500 for any plans offered through a cafeteria plan, such as health plans and health flexible spending accounts will still apply. To understand the effect the IRS filing suspension has on your organization, you must first determine whether or not you offer plans subject to ERISA. Governmental agencies, including public school districts, are specifically exempt from ERISA. Most other employers will still have to file Form 5500 for the component benefits offered under their Section 125 plan, but will not have to file the Schedule F for the Section 125 plan.

For example, if a school district sponsors a Section 125 plan, a Form 5500 is no longer required (IRS Notice 2002-24 suspends the Section 6039D filing requirement, and governmental plans are not subject to ERISA's Form 5500 requirements).

How Does IRS Notice 2002-24 Affect My Form 5500 Filing Requirements?

If your organization is a: / Then: / Because:
Governmental entity / You do not have to file any Form 5500 / Your organization is exempt from ERISA requirements
Non-governmental employer with100 or more participants in the plan at the beginning of the plan year / You must file Form 5500 for component benefits offered under the Section 125 plan / The IRS Notice does not suspend ERISA requirements for Form 5500
Non-governmental employer with fewer than 100 participants in the plan at the beginning of the plan year / Generally, you do not have to file Form 5500 for plans with fewer than 100 participants / ERISA provides a small plan exemption, subject to DOL plan funding requirements

This table is only a general guide to the new IRS provisions. You should check your specific circumstances with a qualified legal or tax professional to determine if any particular requirements or exemptions (church plans and small plans, for example) apply to your organization. This information has been provided to communicate recent regulatory or legislative developments that may be of interest to our clients. Please understand we cannot give legal or tax advice and we encourage you to contact your legal counsel or tax professional for advice on these issues.