What Is a Summary Annual Report (SAR) and Do You Need One?

If you offer group health or retirement benefits, you've probably heard about Form 5500. But there's a lesser-known partner to that form that trips up a lot of growing businesses: the Summary Annual Report, or SAR. If your business is required to file the 5500 form, you're also on the hook to send the SAR to your plan participants. Miss it, and you could be looking at real penalties.

We put this guide together to walk you through what is a Summary Annual Report, what the SAR covers, who needs one, and the big deadline you don't want to miss. And if you'd rather skip the homework and just have someone handle it for you, Benefits Made Great is here to help.

Call us today at (913) 243-3412 or fill this contact form, and we’ll reach out to you.

What Is a Summary Annual Report?

A Summary Annual Report (SAR) is a short, plain-English summary of the financial details your business reported on Form 5500 for the year. Think of it as the highlight reel version of a much longer, and more technical filing.

The SAR exists because of a federal law called ERISA, the Employee Retirement Income Security Act. ERISA says that employees and beneficiaries covered by certain benefit plans have a right to know how those plans are funded and managed. Whether you’re in Wichita or Kansas City, the SAR is how employers keep that promise. It doesn't get filed with the government. Instead, it goes straight to your plan participants.

Summary Annual Report Requirements: Which Benefits Plans Need One?

Generally speaking, if your business is required to file Form 5500 for a benefit plan, you're also required to distribute a SAR for that same plan. This typically includes:

• Group health plans with 100 or more participants on the first day of the plan year.
• Retirement and pension plans.
• Certain welfare benefit plans, including dental and disability coverage.
• Health reimbursement arrangements and flexible spending accounts that meet ERISA's participant and funding thresholds.

If you run a growing business and you've recently crossed the 100-employee mark, this is a good moment to check whether your plan just became subject to these rules.

SAR Small Plan Exemption: Who's Off the Hook?

Not every business needs to worry about this. There's a SAR small plan exemption that covers a lot of smaller employers. You're generally exempt if:

• Your welfare benefit plan has fewer than 100 participants at the start of the plan year.
• Your plan is unfunded, fully insured, or a combination of both. This means you either pay claims directly from company assets or pay premiums to an insurance provider, without using a separate trust.
• You're a government or church-sponsored plan.
• Your plan only exists to comply with workers' compensation, unemployment, or disability laws.

If none of your plans require a Form 5500 filing, you can skip the SAR entirely. Still, it's worth double-checking your participant count each year, since plans can cross that 100-person line as your team grows.

What Employers Must Include in the SAR

Once you know your plan needs one, the SAR has to include a handful of specific pieces:

• Plan basics: Your plan name, employer ID number, plan type, and the year the report covers.
• Funding and insurance details: Your carrier's information, what types of claims are covered, and total premiums paid for the year.
• Financial snapshot: Plan assets at the start and end of the year, total income, and expenses paid out.
• Participant rights: A note letting employees know they can request a full copy of Form 5500 and review it at your main office.
• Additional access info: Instructions for requesting a copy from the Department of Labor, plus help for non-English speaking participants.

If any of this feels overwhelming, that's perfectly normal. Most employers rely on a broker or third-party administrator to pull the SAR together correctly the first time.

Who Receives the Summary Annual Report?

You don't send the SAR to any government agency. It goes straight to everyone covered under your benefits plan, including:

• Current employees enrolled in the plan.
• Former employees who were enrolled at any point during that plan year.
• Retirees that are still getting benefits.
• Former employees who kept coverage through COBRA.
• Beneficiaries of participants who have passed away.

How to Distribute the Summary Annual Report

You have a few options for getting it to them:

• Hand-deliveryat the worksite: The report must be handed directly to each worker. Stacking copies in a breakroom does not count.
• First-class mail: This is valid via U.S. postal mail to home addresses.
• Company newsletter: This is allowed if the SAR is included in a company publication that reaches participants. A dedicated section or clearly marked insert is the safest way to do this, so it doesn't get lost in with other content.
• Email or electronic delivery: This is only allowed if you follow the DOL's official rules for electronic delivery. In most cases, that means the employee agreed in writing to get documents electronically, or their job requires them to use a computer regularly.

Just assuming your team is fine with email isn't enough to meet the rule.

When Is the Summary Annual Report Due?

Here's the part that catches most business owners off guard. The SAR deadline is tied directly to your Form 5500 filing date.

For most businesses on a calendar-year plan, Form 5500 is due by July 31. That means the SAR September 30 deadline follows two months later, since the SAR is due nine months after your plan year ends. If you filed for an extension on Form 5500, you get some breathing room: your extended SAR deadline becomes two months after the Form 5500 extension period closes, usually mid-December.

Mark your calendar now. This deadline sneaks up fast, especially during a busy back-to-school and fall enrollment season. A benefits broker can help you stay ahead of deadlines like this one all year long. Check out our guide on what an employee benefits broker does to learn more on how they can help.

Penalties for Not Distributing the SAR

Skipping the SAR is a violation of ERISA. If a worker asks for it in writing and you don't respond within 30 days, a court can fine your company up to $110 per day, and that money goes straight to that worker. It's discretionary, so courts don't always charge the full amount, but the costs can still add up fast for a growing business, especially if more than one worker is affected.

It's also worth knowing that this is separate from Form 5500 itself. If your Form 5500 filing is late or missing pieces, that comes with its own, much steeper penalties from the Department of Labor and the IRS. So the SAR penalty and the Form 5500 penalty are two different risks, not one and the same.

Need a Hand with Your Compliance Deadlines?

Form 5500 and the SAR aren't the most exciting parts of running a business, but missing them can get expensive fast. If you're a small business owner in Kansas or Missouri and you're not sure where your plan stands, our team at Benefits Made Great can go through your plan details with you and help make sure you’re not missing any deadlines. 

Reach out anytime at (913) 243-3412, and let's make sure your September due date comes and goes without a headache.