Do SEP plans need to file Form 5500?

SEP plans, or Simplified Employee Pension plans, do not have to file Form 5500 with the IRS. This is because SEP plans are typically designed for small businesses and are considered to be less complex than other types of retirement plans. As a result, the regulatory burden is reduced, and these plans are exempt from the annual filing requirement for Form 5500 unless they are a part of a larger plan or exceed specific thresholds that would categorize them differently.

This exemption reflects the intention behind SEPs, which is to encourage small businesses to offer retirement benefits without the extensive paperwork and compliance requirements associated with larger plans. The rationale is to simplify the process for employers who may not have the resources to manage the more complex requirements of larger or traditional pension plans. Thus, the correct answer emphasizes the unique treatment of SEP plans in this context.