New year, new forms. The Department of Labor’s Employee Benefits Security Administration (EBSA) on Jan. 1 released the Form 5500, Form 5500-SF, and Form 5500-EZ for reporting concerning the 2023 plan year.
The DOL released informational copies of these forms on Nov. 17; they were intended to inform filers regarding what they need to report and the materials they need to gather, but were not for use in filing.
Changes to the Form 5500 for 2023 Filing
Following are changes in the Form 5500 for 2023 filing.
Schedule DCG. Section 202 of the SECURE Act directed the IRS and DOL to modify the form to allow certain groups of defined contribution plans to file a single consolidated annual return/report. Accordingly, for 2023, EBSA has revised the Form 5500 and its filing instructions to add a new filing option—Defined Contribution Group (DCG) Reporting Arrangements.
A new Schedule DCG is added that includes individual plan information for plans reporting within a DCG. The schedule is intended for filing plan-level information and to enable participants and beneficiaries to easily identify any consolidated Form 5500 filing that includes the filer’s plan and to see individual plan details.
Each Schedule DCG must include an attached independent qualified public accountant (IQPA) report for a plan that is required to have an audit under generally applicable rules.
Small Plan Audits Participant Counting Methodology. The Form 5500 and Form 5500-SF, as well as their instructions, are revised to reflect a change in the methodology for counting the number of participants used to determine when a DC plan may file as a small plan, including determining eligibility for the conditional waiver of the IQPA audit requirement.
Beginning with 2023 plan-year filings, a DC plan counts participants with account balances at the beginning of the plan year, except for new plans, which use the number of participants with account balances at the end of the plan year.
Plan Characteristics. Form 5500, Part II, line 8a, plan characteristics code 3D has been updated to include pre-approved 403(b) plans among the listed plans covered by that code.
Schedule H Administrative Expenses Transparency Improvements. Schedule H is updated to add new breakout categories to the “Administrative Expenses” category of the Income and Expenses section of the Schedule H balance sheet.
Schedule MEP for Multiple-Employer Plans. A new Schedule MEP (Multiple-Employer Pension Plan Information) is added to consolidate SECURE Act-related and other multiple-employer plan reporting into one schedule.
For 2023, questions intended to satisfy the SECURE Act’s reporting requirements for pooled employer plans and questions to link the Form PR (Pooled Employer Registration) and the Form 5500 for each plan operated by a pooled plan provider are also found on the Schedule MEP. And EBSA added a new checkbox to the Form 5500 (in Part II, line 10a(5)) to indicate a Schedule MEP is attached.
Schedule MB. Schedule MB is revised to add notes that clarify how to report special financial assistance for multiemployer plans.
Schedule R. Schedule R now includes several new IRS tax compliance questions that concern three major areas: non-discrimination testing, ADP testing and pre-approved plan letters. There are several changes to Schedule R, line 19 and its instructions, including:
- Schedule R, line 19a, is modified to require that all defined benefit plans (except DFEs) with 1,000 or more participants at the beginning of the plan year show the end-of-year distribution of assets, broken down in seven reconfigured categories of plan assets, and provide clarification concerning classification of atypical investments.
- Schedule R, line 19b, is modified to change the available categories for current average duration.
- Schedule R, line 19c is eliminated.
Schedule SB. Schedule SB is revised to include the following:
- Schedule SB, line 6 (Target Normal Cost), and its instructions, are changed to address a possible situation in which the amount reported on line 6c would not be consistent with IRS regulations and the federal law if the calculation was done in accordance with the instructions.
- The instructions for line 26a are changed to revise a line reference.
- The instructions for the line 26b attachment (projected benefit payments), for situations in which a plan assumes some, or all, benefits are paid in a lump sum, and uses the annuity substitution rule in 26 CFR 1.430(d)– 1(f)(4)(iii)(B) to determine the funding target.
The 2023 Form 5500 is available here.
The instructions for the 2023 Form 5500 are here.
Changes to the Form 5500-SF for 2023 Filing
Following are changes in the Form 5500-SF for 2023 filing.
DCG Reporting Arrangements. Section 202 of the SECURE Act directed the IRS and DOL to modify the form to allow certain groups of DC plans to file a single consolidated annual return/report. Accordingly, for 2023, EBSA has revised the Form 5500 and its filing instructions to add a new filing option—Defined Contribution Group (DCG) Reporting Arrangements.
All DCGs and individual plans within a DCG reporting arrangement must report using a consolidated Form 5500, and may not use Form 5500-SF for DCG reporting regardless of DCG size or the size of plans within the DCG reporting arrangement.
Small Plan Audits Participant Counting Methodology Revisions. Form-SF and its instructions are revised to reflect a change in the reporting methodology related to the number of participants used in the current threshold for determining when a DC plan may file as a small plan. For 2023, generally, a DC plan counts participants with account balances at the beginning of the year, except for new plans that measure based on end of year participants with account balances.
Schedule MEP for Multiple-Employer Plans. A new Schedule MEP (Multiple-Employer Pension Plan Information) has been added for use with Form 5500-SF.
For Form 5500-SF filers, a new checkbox is added to Part I, line A to indicate that a Schedule MEP is attached. Pooled employer plans (PEPs) may not file Form 5500-SF; instead, all PEPs, regardless of size, must file Form 5500 and include Schedule MEP in that filing.
Collectively Bargained Plans. Part I is revised to renumber Line “D” as Line “E” and to add a new Line D collectively bargained plan box to improve identification of plans, and/or the benefits paid by plans, that are subject to the collective bargaining process.
Plan Characteristics. Part IV, line 9a, plan characteristics code 3D has been updated so it now includes pre-approved 403(b) plans among the listed plans that code covers.
Compliance Questions. Part V, question 10a has been updated to remind filers to continue to check the box “yes” if there is a failure to transmit participant contributions for any prior year failures until fully corrected.
IRS Compliance Questions. A new Part VIII has been added, which concerns (1) whether the plan uses the permissive aggregation rules to satisfy coverage and nondiscrimination tests, (2) how the 401(k) plan intends to satisfy the nondiscrimination requirement, and (3) whether the plan sponsor is an adopter of a pre-approved plan.
Administrative Penalties. The instructions now reflect an increase in the maximum civil penalty amount assessable under ERISA Section 502(c)(2).
The 2023 Form 5500-SF is available here.
The instructions for the 2023 Form 5500-SF are here.
