I am trying to complete Form 5500 lines 5 & 6 for an employer welfare plan and need clarification on counting the number of plan participants. The definition I found seems to describe a 401(k) plan.
What would be the correct welfare plan instruction for completing lines 5-6?
Welfare Plans complete only
Line 5 Total number of participants at the beginning of the Plan Year:
Line 6a(1) Total number of active Participants at the beginning of the Plan Year:
Line 6a(2) Total number of active Participants at the end of the Plan Year:
Line 6b Retired or separated Participants receiving benefits:
Line 6c Other retired or separated participants entitled to future benefits:
What should the plan sponsor do if the group completed the prior year section lines 6a(1), 6a(2), 6b, and 6c.) incorrectly?
Different than a 401(k) plan where participants are counted based on plan eligibility, health and welfare plans count participants based on those who are covered or authorize deductions, whether voluntary or mandatory. An employee is a participant when automatically covered at no cost (e.g., for life or disability) or has authorized deductions (e.g., for medical or dental). For a Wrap Plan, the Line 5 and Line 6 counts include participants covered by any of the Wrap Plan’s component plans, but participants covered by more than one component plan are counted only once.
Line 5: Count all employees who are enrolled or covered by at least one of the Wrap Plan’s benefits. This count also includes any COBRA beneficiaries and enrolled retirees.
Line 6(a)(1) and (2): Count only active employees enrolled or covered by at least one plan benefit. Do not include retirees or terminated employees with COBRA coverage.
Line 6(b): Count retired or separated participants who qualify for and are receiving benefits under the plan but who are not active employees at the end of the plan year. This includes former employees with COBRA or other continuation coverage for dental or vision benefits, former employees receiving employer-provided Medicare supplements, and former employees receiving disability coverage that is paid by the employer directly.
Line 6(c): Count retired or separated participants who are still covered by the plan and entitled to begin receiving benefits in the future. Do not include anyone counted in 6(b). Former employees still in their COBRA election period but have not made their election at the end of the plan year can be counted here.
The counts reported on Schedule A for each insured component plan are different because Schedule A counts “persons covered” instead of “participants.” The Schedule A count should include dependents covered under the plan, but these dependents are not included in the Form 5500 participant counts on Lines 5 and 6.
If an employer discovers an error in a previous Form 5500 filing, it should file an amended Form 5500 through the EFAST2 system.