The IRS, DOL, and PBGC have been busy overhauling rules that apply to the Form 5500/5500-SF annual reporting requirements for retirement plans and health and welfare plans. The new rules are proposed changes intended to help these agencies, other agencies, plan sponsors, fiduciaries and participants better understand the compliance status, financial condition and operations of employee benefit plans and to ensure that the information requested by the Form 5500/5500-SF and the related schedules is responsive to legal requirements and financial standards applicable to employee benefit plans. The following highlights these proposed changes.

Changes to the 2015 Form 5500/5500-SF

In 2015, the IRS included new line items to the 2015 Form 5500/5500-SF and Schedules H, I and R. The new line items include questions regarding preparer information, trust information, financial compliance, and retirement plan compliance. At first, the IRS indicated that the line items related to compliance questions were optional. However, earlier this year the IRS changed its position and indicated in the instructions to the 2015 Form 5500/5500-SF that plan sponsors are not required to complete the new line items for the 2015 plan year and should skip the new line items when completing the form and schedules.

The following should be skipped for the 2015 plan year Form 5500 filing:

Form 5500 and Schedules H and R

  • Form 5500
    • Preparer’s name (including firm’s name, if applicable), address, and telephone number at the bottom of the first page of Form 5500.
  • Schedule H (Financial Information)
    • Part IV, Compliance Questions: Lines 4(o) and 4(p).
    • Part V, Trust Information: Lines 6(a) through 6(d).
  • Schedule R (Retirement Plan Information)
    • Part VII, IRS Compliance Questions: Lines 20(a) through (c), 21(a) through (b), 22(a) through (d), and 23.

Form 5500-SF and Schedule I

  • Form 5500-SF
    • Preparer’s name (including firm’s name, if applicable), address, and telephone number at the bottom of the first page of Form 5500.
    • Part V, Compliance Questions: Line 10(j).
    • Part VIII, Trust Information: Lines 14(a) through 14(d).
    • Part IX, IRS Compliance Questions: Lines 15(a) through 15(c), 16(a) through 16(b), 17(a) through 17(d), 18, 19, and 20.
  • Schedule I (Small Plan Financial Information)
    • Part II, Compliance Questions: Lines 4(o) and 4(p).
    • Part III, Trust Information: Lines 6(a) through 6(d).

Plan sponsors should be aware that there is no benefit to completing these new line items and should simply familiarize themselves with these new line items, while keeping abreast of the recently proposed changes discussed below.

Proposed Changes to Form 5500/5500-SF and Related Schedules for 2019 and Later

On July 21, 2016, IRS, DOL, and PBGC proposed significant changes to the Form 5500/5500-SF and related schedules. The proposed changes are complex and will require plan sponsors and their service providers to do some significant information and data collection. The deadline to submit comments to the proposed changes is October 4, 2016. The proposed changes are not expected to take effect until on or after January 1, 2019.

Some of the key proposed changes are:

Group Health Plans

  • No Small Plan Exemption. Currently, small group health plans (less than 100 participants) are exempt from filing a Form 5500 or 5500-SF. Under the proposed changes, these group health plans would no longer be exempt and would be required to file a Form 5500.
  • New Schedule J (Group Health Plan Information). A new Schedule J would require plan sponsors to report information about group health plan operations, ERISA compliance and Affordable Care Act compliance.

ESOPs

  • New Schedule E (ESOP Information). Currently, employer stock ownership plans (ESOPs) are not required to file a specific-ESOP schedule. Under the proposed changes, all ESOPs would be required to file a new Schedule E.

Form 5500 and 5500-SF. Under the proposed changes, the forms will require new answers and information to questions related to:

  • Form 5500 and Form 5500-SF. Fiduciary information, participant information, plan characteristics, and the PBGC insurance program.
  • Form 5500-SF Only. Retired, separated, and deceased participant information, specific asset information, plan funding arrangements, plan benefit arrangements, operational compliance (e.g., any unrelated business taxable income, any service provider terminations for violating Title I of ERISA, SPD compliance status), plan terminations and transfers, defined contribution plan termination where transfers were made to financial institutions, and IRS compliance questions.

Schedules. Under the proposed changes, the forms will require new answers and information to questions related to:

  • Schedule A (Insurance Information). Premium payment delinquencies.
  • Schedule C (Service Provider Information). Disclosure requirements for service providers under ERISA Section 408(b)(2), service provider fiduciary status, and service provider arrangements. Note that under the proposed changes a separate schedule would need to be filed for each service provider, rather than a single schedule that covers multiple service providers.
  • Schedule G (Financial Transactions). Nonexempt transactions.
  • Schedule H (Financial Information). Compliance (e.g., were plan assets valued at least annually at FMV, SPD compliance status), service provider termination as it relates to a failure to comply with Title I of ERISA, plan terminations and transfers, and defined contribution plan termination where transfers were made to financial institutions.
  • Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information). Withdrawal liability payments, and active, retired, and terminated vested participant data information.
  • Schedule R (Retirement Plan Information). Required minimum distributions.
  • Schedule SB (Single Employer Defined Benefit Plan Actuarial Information). Active, retired, and terminated vested participant data information.

Schedule I (Small Plan Financial Information). Under the proposed changes, Schedule I would be eliminated. Small plans that are not eligible to file a Form 5500-SF that are currently required to file Schedule I would be required to file Schedule H.

Plan sponsors and administrators are encouraged to review the proposed changes and consider their impact on their plans and the ability to provide the additional information that may be required.