Comparing Forms 10-K and 5500: How Do They Differ?
The benefit plans provided by companies and firms are regulated by the government. The government does this by assigning some of its agencies to specifically monitor pension fund performance. For public pensions, two forms are studied by the government: form 10-K and form 5500. Let us compare these two data sources and find out what distinguishes one from the other.
The element that these two forms have in common is that both are required by the government to be submitted annually for the purpose of assessing the performance of a company when it comes to providing employee benefits and keeping the rights of their employees protected.
Form 10-K is a report made annually to the US Securities and Exchange Commission or SEC. This report must be filed 90 days after the fiscal year ends. The nature of the report will depend on how big the company is and how long the company has been public. This form details the financial situation of a company. It also includes information about the business’s current condition. The form includes financial statements that have gone through auditing by a third party accounting firm. This form is not similar to the report given to shareholders in the form of a booklet whenever they meet to choose new directors.
The US Securities and Exchange Commission requires that disclosure sections need to be included in the form 10-K. Usually, this form can include some, if not all, the following elements:
- Financial data. A financial summary detailing data over the past five years must be included in the form. This provides an overview of the financial performance of the firm. Pension obligations is not necessarily included in this part.
- Results of Operations and Analysis of Financial Condition. This section can include any of the following:
- Accounting for pensions
- Net pension liabilities
- Pension plan cash contributions
- Unfunded pension obligations
If you need more information regarding pension obligations, the footnotes contained in Form 10-K may provide the information you need. When it comes to welfare plans and pension, the following information may be available in the form:
- Benefit obligations
- Pension funding requirements
- Pension plan asset return rates
- Return of assets
- Trends in health care cost
On the other hand, form 5500 is a report also made annually to the Department of Labor, the IRS, and the Pension Benefit Guaranty Corporation.
After all of the required information has been attached to the form, the total you will submit can amount to tens of pages’ worth of documents. The form 5500 includes the following:
- Financial information
- Insurance information
- Participating plan information
- Retirement plan information
- Service provider information
- Single employer defined benefit plan information
The filing of this form can easily be started by checking of the website of the Department of Labor.
The difference between these two is that Form 10-K provides projections for the future, whereas form 5500 only focuses on the present. Therefore, the information provided in 10-K is significantly bigger, from the reports on pension obligation to the number of requirements to be submitted.
Form 5500 provides more information since it includes present-dated information that is not really shown in form 10-K, such as the present liability amount.
If you are wondering how to reconcile the information in these two forms, the answer is you don’t. The information provided by these two forms naturally differ because they do not serve the same function, and they do not focus at the same time frame. The government requires firms to submit different forms that are designed to provide different points of view to those who are going to be checking them, so thinking that these two forms should be the same would be wrong.
It is important to understand what each of these two forms do and which agencies look at the information. These forms are checked in order to ensure quality in benefit planning and in upholding employee rights.
Are you seeking a national leader in benefit compliance consulting?
View our Form 5500 Preparation Services
Request a quote or call us today at (515) 244-2424