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33. Who pays for cafeteria plan administration expenses, the employer or the employee?
Either or both can pay the administration expenses. In addition, in some circumstances administration expenses can be included as qualified pre-tax benefits under the cafeteria plan. 34. How are future Social Security benefits affected by cafeteria plan elections? Because Social Security taxes are not paid on cafeteria plan contributions, employees' future Social Security retirement benefits may be reduced. However, for most employees, this will be offset by the immediate tax savings attributable to plan participation. 35. Does an employer sponsoring a cafeteria plan have to file Form 5500? Yes. All employers sponsoring cafeteria plans must file a Form 5500 with the IRS within 7 months of the end of each plan year. However, cafeteria plans exempt from ERISA's reporting requirements (such as unfunded and/or fully insured plans, church plans and government plans) are only required to file an abbreviated Form 5500 (Code 6039D). 36. What is the penalty for failing to file Form 5500? Any person who is required to and who fails to file a Form 5500 annual return is subject to an IRS penalty of $25 per day up to a maximum of $15,000 [Code 6652(e)]. In addition, the Department of Labor may impose a $1,000 per day penalty for each failure to file a Form 5500 Annual Report as required by ERISA. 37. What information is required on the Form 5500? The law requires the employer to report the number of employees; the number of employees eligible to participate under the plan; the number of employees participating under the plan; the total cost of the plan during the year; the name, address, and taxpayer identification number of the employer; the type of business in which the employer is engaged; and any other information that the IRS may require. Some of this information may not be required until the IRS provides further guidance and new forms (Code 6039D). Those Plan Sponsors required by ERISA to file an Annual Report are required to submit additional information as specified in the Form 5500 instructions. 38. When must the employer file the Form 5500? The employer must file the appropriate Form 5500 return by the last day of the 7th month after the plan year ends (e.g., July 31 for a calendar year plan). ERISA FAQs | 
