The Department of Labor (DOL), Treasury and Pension Benefit Guaranty Corporation (PBGC) on May 20 released the final revisions to the forms and instructions for the Form 5500 series to be used for reporting concerning plan years beginning on or after Jan. 1, 2022. They also indicated, however, that review of additional considerations and revisions will continue.
The revisions to the Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500–SF Short Form Annual Return/Report of Small Employee Benefit Plan incorporate changes to the forms and instructions that primarily implement annual reporting changes for defined benefit plans. They also include a limited number of instruction changes that focus on reporting for multiple-employer pension plans (MEPs), including pooled employer plans (PEPs). The remaining changes are technical changes that are part of the annual rollover of the Form 5500 and Form 5500-SF forms and instructions.
On Sept. 15, 2021, the DOL, Treasury and PBGC published a notice of proposed forms revisions (NPFR) to amend the Form 5500 Annual Return/Report primarily to implement annual reporting changes related to legislative provisions in the SECURE Act focused on MEPs and defined contribution reporting groups (DCGs). The NPFR also set forth additional proposed changes intended to improve reporting on multiemployer and single-employer pension plans, updated reporting on Form 5500 Annual Return/Report and enhanced the reporting of certain tax qualification and other compliance information by retirement plans. The DOL simultaneously published a proposed rulemaking (NPRM) required to implement the proposed forms revisions.
Among the positions that the departments took were that a large plan that elects to participate in a DCG must continue to be subject to an 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 American Retirement Association expressed support in a Nov. 1, 2021 comment letter regarding the proposed changes to revise the small plan audit waiver, but also expressed concern over the new DCG reporting arrangement in relation to subjecting the DCG to a trust-level audit, as well as to plan-level audits for each large plan in the group.
The DOL’s Employee Benefits Security Administration (EBSA) on Dec. 29, 2021 unveiled final revisions to the Form 5500 and the Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan. The revised forms are to be used for reporting concerning the 2021 plan year, and included changes that apply to changes for MEPs and PEPs. EBSA also said that it planned to issue additional notices concerning other changes to the Form 5500 included in the September 2021 proposal.
The Newly Released Revisions
The revisions to the forms incorporate a limited number of annual reporting changes that would apply beginning with the 2022 plan year Form 5500 Annual Return/Report. These changes focus mainly on finalizing changes to annual reporting for pension plans that were included in the September 2021 proposal, but also include some further annual reporting changes for MEPs.
More specifically, the annual reporting changes for 2022 are revisions to Schedules MB, SB and R and their respective instructions to improve reporting by DB plans subject to Title IV of ERISA. They also include additions to the plan characteristics codes reportable on line 8 of Form 5500 and line 9 of Form 5500-SF that require defined contribution MEPs (including PEPs) to be identified as such.
Following are highlights of the changes.
Schedules MB, SB, and R. The agencies are adding new questions and revising existing questions these schedules and modifying the contribution and benefit attachment requirements to enable them to more easily access DB plans’ information and project more precisely insurance programs’ liabilities. For both single-employer and multiemployer DB plans, the agencies are providing plans with the option to provide certain required attachments in a spreadsheet file (CSV format).
Reporting Changes for Multiple-Employer Plans. The final forms revisions include a limited number of changes to the instructions for the Form 5500 that are intended to clarify and improve annual reporting for ERISA-covered defined contribution MEPs, including those that meet the definition of “pooled employer plan.” These include:
- New plan characteristics codes added to the Form 5500 and Form 5500-SF instructions for filers to use to identify different types of defined contribution MEPs on Form 5500 and Form 5500-SF, Part II, lines 8 and 9, respectively.
- Updates to the Form 5500 and Form 5500-SF instructions to clarify which entities should report as plan sponsors on line 2a and as plan administrators on line 3a, regarding certain types of defined contribution MEPs. For 2022 filings, these revisions include other minor amplifying and clarifying changes to instructions for 2022 forms.
What the Revisions Don’t Do. The revisions do not include final annual reporting changes based on other proposals included in the September 2021 proposal. This, the agencies say, is to allow coordination of consideration of public comments and other regulatory processes for adopting final changes to the Form 5500 series with a separate contractual development schedule for integrating forms and instructions changes into the EFAST2 filing system.
The agencies say that they are still evaluating public comments on elements of the September 2021 proposal not included in these final forms revisions, including:
- DCG reporting and related audit issues;
- Schedule MEP and related reporting requirements regarding MEPs;
- financial statement improvements to the Schedule H and Schedules of Assets;
- changes in participant counting methodology for Independent Qualified Public Accountant (IQPA) purposes;
- changes regarding reporting on participating employers for MEWAs that file the Form M-1; and
- additional questions on pension plan compliance with certain Internal Revenue Code requirements.
They note that these are areas in which a number of commenters suggested a delay in implementation, substantial revisions or re-proposals. The agencies further say that they agree that sufficient lead time for programming and systems changes, as well as time to develop contracts and other communications among plans and service providers, is needed to properly implement these significant changes to annual reporting requirements.
“Rather than rush consideration of issues and decision-making on these important annual reporting issues,” the agencies say, they have decided that any changes to the Form 5500 Annual Return/Report in connection with those matters will be addressed either in:
1. a further final forms revisions notice based on the September 2021 proposal, or
2. a separate proposal with modifications that would focus on a broader range of improvements to the annual reporting requirements.