After nearly a year’s delay, the U.S. Department of Labor has issued the final rules for filing Form 5500, the annual report employers must submit for their employee benefit plans. The delay means that plan sponsors now have until Jan. 1, 2009, to comply with a new mandatory electronic filing system.
The federal Employee Benefits Security Administration (EBSA) originally planned to release the regulations in December 2006 but did not publish the finalized revisions in the Federal Register until Nov. 16, 2007. In the proposed regulations, the original effective date for requiring plan sponsors to file Form 5500 electronically was Jan. 1, 2008.
While employers and business groups have praised the electronic system, stating that it could provide welcome administrative relief to benefits managers, the same groups claimed that plan sponsors would not have enough time to prepare and comply with the new requirements and asked the EBSA to delay the effective date by at least 12 months.
After receiving dozens of comments and extending the comment period by 30 days, EBSA officials responded to the concerns and changed the effective date, much to the relief of many business and benefits advocacy groups.
The EBSA’s attempt to simplify Form 5500 and create a new shortened version for small business also drew praise from employers. However, many of the comments asked the EBSA to clarify further which forms and benefit schedules plan sponsors needed to submit for their annual report. EBSA officials have stated that they attempted to address the concerns expressed in the public comments and that the 11-month delay was needed to review the comments and finalize the regulations.
“Publishing the final rules completes the first component of our fee transparency initiative for employee benefit plans,” said Bradford P. Campbell, assistant secretary of labor for EBSA, in a statement. “The expanded reporting of compensation received by service providers will make it easier for plan officials to understand and monitor investment fees charged to plan accounts and revenue sharing arrangements that compensate brokers, pension consultants and other investment service providers.”
Bill Leonard is senior writer for SHRM Online.