Blue Ridge ESOP Associates Industry News

What exactly is the Summary Annual Report and what do I do with it?

Posted by Ray Mazurowski

Sep 8, 2017 2:00:00 PM

DOL_Badge.jpgThe Summary Annual Report (SAR) is a summary of the IRS Form 5500 that must be distributed to all plan participants. You’ll typically receive a copy of the SAR with your plan Participant Statements. Compliance is mandatory, and penalties for willful noncompliance can include fines in excess of $100,000, imprisonment up to 10 years, or both.

The Department of Labor (DOL) states that the SAR must be distributed within nine months after the close of the plan year, which is two months after the Form 5500 is due.  For example if you have a calendar plan year end (December 31st), the Form 5500 with no extensions is due July 31st and the SAR must be distributed by September 30th. If an extension has been filed to extend the due date for the Form 5500 to October 15th, the SAR is then due within 2 months after the close of the period for which the extension was granted - December 15th, in this example.

The SAR must include a basic financial statement which states plan expenses, the value of the plan’s assets, amount of plan contributions and a section outlining a participant’s rights to additional information. Typically, it is a one-page document. The SAR is not just a document for ESOPs; it is used for all qualified pension plans.

The delivery of the SAR can be done in a variety of different ways:

  • Distributing the SAR at the participant’s worksite by handing them a hard copy
  • Distributing the SAR along with the participant’s annual statement
  • Including the SAR as a special insert inside a company newsletter or some other kind of publication
  • Mail via USPS to the participant’s place of residence
  • Send electronically, but the participant must have consented to receive documentation electronically first. Participants will still have the right to request a paper copy. As a service for our ESOPConnection Users, we post the current and all prior SARs we generated for your plan

Please contact your Blue Ridge Administrator if you have any questions.

Topics: Form 5500, DOL, Summary Annual Report