The ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with an advisor in Texas is representative of a common inquiry related to Form 5500 reporting. The advisor asked:
“One of my plan sponsor clients commented to me that it is not his job to file Form 5500 for the plan — that’s the record keeper’s responsibility. Is that true? Isn’t the plan sponsor responsible for filing the Form 5500 annually?”
Highlights of Discussion
- Technically, the plan administrator has the fiduciary responsible for IRS and DOL reporting on the plan, including the filing of Form 5500 [ERISA 3(16)(A) and Treasury Regulation 1.414(g)-1(b)(1)]. The term “plan administrator” is defined as the person designated as such in the plan document or, if not specifically designated, the plan sponsor.
- It would be important for your client to review the service contract with their plan record keeper to establish who has the ultimate fiduciary responsibility to File Form 5500.
- Many plan record keepers specify in their contracts they will only perform certain ministerial functions with respect to the administration of qualified retirement plans, such as simply preparing the Form 5500. Ministerial functions are not fiduciary duties.
- So while your client’s record keeper may be filling out Form 5500 for the plan, the plan administrator — who is often the plan sponsor — remains the party responsible for ensuring the information is accurate and timely filed.
Conclusion
Form 5500 reporting is an important compliance issue for plan sponsors. For that reason, it is essential for plan sponsors to review their plan service contracts to be clear regarding the person or entity who will be held responsible for improper or late Form 5500 filings.
The Columbia Management Retirement Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC, a third-party industry consultant that is not affiliated with Columbia Management. For informational purposes only. Please consult a tax advisor or attorney for specific tax or legal needs. © 2014 Columbia Management Investment Advisers, LLC. Used with permission.
