Certified Plan Sponsor Professional (CPSP) Practice Exam

What document must plan sponsors file with the IRS to report plan operations?

1. Form 1040

2. Form W-2

3. Form 5500

4. Form 990

The correct answer is: Form 5500

The correct answer is Form 5500, which is the document that plan sponsors are required to file with the Internal Revenue Service (IRS) for reporting the operations of employee benefit plans. This form is central to the regulatory requirements for pension and welfare benefit plans under the Employee Retirement Income Security Act (ERISA). Filing Form 5500 helps to communicate important information about the plan's financial condition, investments, and operations. It serves multiple purposes, including ensuring compliance with federal regulations, providing information to the government, and making plan details available to participants. Additionally, filing Form 5500 allows the IRS, Department of Labor, and Pension Benefit Guaranty Corporation to monitor compliance with the rules governing employee benefit plans. In contrast, the other forms listed are associated with different types of reporting and are not used for the same purposes as Form 5500. Form 1040 is an individual income tax return, Form W-2 reports wages paid to employees and taxes withheld, and Form 990 is an informational return for tax-exempt organizations. None of these forms pertain specifically to the reporting of plan operations like Form 5500 does.