Agencies Seek Input on Form 5500 Revisions

Proposed changes address consolidated Form 5500 filings for pooled plans

Stephen Miller, CEBS By Stephen Miller, CEBS September 20, 2021
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Agencies Seek Input on Form 5500 Revisions

Federal agencies are seeking public comments on proposed revisions to the Form 5500 Annual Return/Report filed by private-sector employee benefit plans to comply with statutory changes under the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which became law in 2019.

"The proposed form changes and related regulatory amendments address [SECURE] Act changes, especially for multiple employer plans, and improve [Form 5500 as a] critical enforcement, research and public disclosure tool," said Ali Khawar, Department of Labor (DOL) acting assistant secretary for employee benefits security.

On Sept. 15, the DOL's Employee Benefits Security Administration (EBSA), the IRS and the Pension Benefit Guaranty Corporation (PBGC) published two proposed rules in the Federal Register:

  • Annual Reporting and Disclosure, to conform Form 5500 reporting regulations under the Employee Retirement Income Security Act (ERISA) with the proposed Form 5500 revisions.

The agencies also released a fact sheet summarizing the proposed changes.

SECURE Act Changes

While employers in the same industry had previously been allowed to form multiple employer plans, known as MEPs, the SECURE Act permits unaffiliated employers, as of January 2021, to join together in a single 401(k) pooled employer plan (PEP).

"A PEP has a single plan document, a single Form 5500 filing and a single independent plan audit," noted Craig P. Hoffman, an attorney with San Francisco-based Trucker Huss, when the SECURE Act became law. A pooled plan provider, whether a financial services firm, insurance company, third-party administrator or similar entity, "must serve as the ERISA section 3(16) plan administrator, as well as the named fiduciary for the plan," he explained.

Defined Contribution Group Plans

The SECURE Act also established another new type of plan arrangement, often referred to as a group of plans (GoP) but which the proposed rules now call a defined contribution group (DCG).

A DCG allows employers, whether unrelated or related, to file a single Form 5500 for multiple defined contribution plans if the plans have the same trustee, administrator, fiduciaries, investments and plan year. However, unlike PEPs, plans in a DCG remain distinct entities. While they can file a single consolidated Form 5500, individual plans participating in a DCG arrangement with a consolidated Form 5500 filing remain subject to audit requirements, the proposed revisions clarify.

After considering multiple issues, "the departments decided to propose that a large plan that elects to participate in a DCG must continue to be subject to an IQPA [independent qualified plan accountant] audit and that the audit report for the plan would have to be filed with the consolidated Form 5500 of the DCG reporting arrangement," the Proposed Revision of Annual Information Return/Reports states.

Pete Swisher, president of Waypoint Fiduciary, a consultancy in Versailles, Ky., focused on group retirement plans, wrote that "as part of the package of guidance, the Departments addressed the audit requirement in GoPs by killing the hopes of those who expected a GoP to have a single consolidated audit like that of multiple employer plans."

MEWAs Also Affected

As an ancillary matter, some of the proposed Form 5500 revisions would apply to multiple employer welfare arrangements (MEWAs) that offer coverage for medical benefits among multiple employers. The proposals, for example, call for transferring participating employers' information from Form 5500 to Form M-1 for health benefit MEWAs.

For the 2021 plan year, pending the implementation of the Form M-1 changes, all plan MEWAs would continue to provide participating employer information as a nonstandard attachment to the 2021 Form 5500 Annual Return/Report in a similar manner as currently required, the proposal states.

Comment Period

Publication of the proposals starts a 45-day comment period that ends on Nov. 1. Employers can submit comments electronically to the Federal eRulemaking portal. All comments received will be posted online at the EBSA website.

The DOL specifically requests comments on the proposed form and instruction changes, such as the costs and burdens to plans, participants, beneficiaries, plan fiduciaries, plan service providers and other affected parties, as well as suggestions regarding alternative changes.

If adopted, the proposed revisions generally would be effective for plan years beginning on Jan. 1, 2022, or later. In general, forms for the 2022 plan year are filed starting in July 2023.

A limited number of SECURE Act changes requiring reporting of basic identifying information for PEPs would apply to the 2021 plan year forms, using an interim attachment, the agencies said.

Future Actions

"The DOL also has added a separate project to its semiannual regulatory agenda that would focus on a broader range of improvements to the Form 5500 annual reporting requirements," the National Association of Plan Advisors (NAPA) reported on Sept. 15. Among the project goals:

  • Modernizing the financial and other annual reporting requirements on the form.
  • Continuing to make the investment and other information on the form more data-minable.
  • Enhancing the ability of the DOL, IRS and PBGC to collect employee benefit plan data that best meets the needs of changing compliance projects, programs and activities.

"Looks like many potential changes to future 5500s may be forthcoming, after a quiet period of where the 5500 was largely unchanged for a few years," tweeted Mike Webb, a senior financial advisor at CAPTRUST in New York City.


Reviewing the Basics: Form 5500 Reporting Requirements

Form 5500 reporting, due annually by July 31 for calendar-year benefit plans, serves as the principal source of information for regulatory agencies regarding the operations, funding and investments of more than 800,000 pension and welfare benefit plans.

Under ERISA and the Internal Revenue Code, unless exempt, pension and other employee benefit plans generally are required to file annual returns/reports concerning the financial condition and operations of the plan.

Filing a Form 5500, or a Form 5500-Short Form for small employee benefit plans, together with any required schedules and attachments, generally satisfies the annual reporting requirements.


[Small businesses can find offering a retirement plan to be daunting. SHRM is offering a program through Raymond James that may help. Visit www.shrm.org/401k to learn more.]


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