The IRS has issued proposed regulations that will require plan administrators (or, in some instances, an employer maintaining a plan) that must file 250 or more returns during the year to use "magnetic media" to file statements, returns and reports required under Internal Revenue Code (Code) sections 6057 (Form 8955), 6058 (Form 5500) and 6059 (actuarial reports). Magnetic media is defined as electronic filing or other media specifically permitted under the applicable regulations. The determination of whether a filer must file at least 250 returns is made by aggregating all returns, regardless of type, that the filer is required to file, including income tax returns, returns under Code section 6033 (Form 990), information returns, excise tax returns and employment tax returns. Additionally, controlled group rules apply to determine whether a plan administrator is required to file 250 or more returns. Failure to file the returns on magnetic media will result in the filer being deemed to have failed to file the required statement, return or report, which can result in penalties. The proposed effective date is plan years beginning on and after January 1, 2014, but only for filings with a filing deadline (not including extensions) after December 31, 2014.
REINHART COMMENT: Employers should carefully review whether they may be subject to this new guidance, as the IRS has clarified that failure to file electronically is deemed a failure to file. While electronic filing of the Form 5500 and corresponding Schedules and reports has been required for the plans since 2010, this new guidance could impact filers of the Form 5500 EZ and filers of the Form 8955, as filing the Form 8955 electronically has been optional to this point.