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Proposed SECURE Act Revisions to Form 5500 Issued

SECURE Act

The Department of Labor (DOL), IRS and Pension Benefit Guaranty Corporation (PBGC) on Sept. 14 issued proposed revisions to the Form 5500. The changes primarily relate to statutory amendments to ERISA and the Internal Revenue Code enacted as part of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 201 .

Setting the Table 

The Office of Management and Budget (OMB) website indicated that the White House recently completed its review of the proposed regulations, which were sent to OMB July 30. 

The SECURE Act includes a direction to the Secretaries of Labor and Treasury to develop a new aggregate annual reporting option for certain groups of retirement plans and included other statutory amendments that directly impact annual reporting requirements for multiple-employer pension plans (MEPs). It also provides that the two departments:

  • Shall cooperate to modify the Form 5500 Annual Return/Report so that all members of a group of defined contribution individual account plans may file a single aggregated annual return/report satisfying the requirements of Code Section 6058 and Section 104 of ERISA. 
  • May require any information regarding each plan in the group that they determine is necessary or appropriate for the enforcement and administration of the Internal Revenue Code and ERISA. 

The SECURE Act also mandates that consolidated reporting by a group must include information that will enable participants in each of the plans to identify any aggregated return/report filed regarding their plan. 

Overview of Proposed Changes 

The proposed revisions involve the following major categories of changes, along with other technical revisions and updates, to the current structure and content of the Form 5500 Annual Return/Report. 

The proposal would update the Form 5500 and its instructions by: 

  • adding a new Schedule DCG (Individual Plan Information) to provide individual plan-level information for defined contribution plans covered by a defined contribution group (DCG) consolidated Form 5500 filing; and  
  • adding a new Schedule MEP (Multiple Employer Pension Plan) and a new checkbox to the Form 5500 to indicate that Schedule MEP is attached to the Form 5500. 

The proposed revisions also would: 

  • Transfer the participating employer information from the Form 5500 Annual Return/Report to the Form M-1 for all multiple employer welfare arrangements (MEWAs)) (plan and non-plan MEWAs)) that offer or provide coverage for medical benefits, and continue to require reporting of participating employer information on the Form 5500 Annual Return/Report for plan MEWAs that provide other benefits. 
  • Update Schedule H and instructions to standardize the schedules of investment assets required to be included in the annual return/report (Schedule H, line 4i Schedules), so that the information can be entered or imported for improved electronic use and transparency. 
  • Update the Form 5500 and 5500-SF and their instructions regarding counting participants to change the current threshold for determining when a defined contribution plan may file as a small plan, including eligibility for the waiver of the requirement for small plans to have an audit and include the report of an independent qualified public accountant with their annual report. 
  • Add trust questions to the Form 5500, the Form 5500-SF and the IRS Form 5500-EZ regarding the name of the plan’s trust, the trust’s EIN, the name of the trustee or custodian, and the trustee’s or custodian’s telephone number. 
  • Revise the 2021 5500 Annual Return/Report instructions to provide an interim method of reporting participating employer information for MEPs and pooled plan provider identification information for pooled employer plans pending the Schedule MEP implementation for 2022 plan year filings.

DOL 

The DOL components of this proposal generally are focused on implementing annual reporting changes related to the SECURE Act and MEPs and other supporting proposed changes intended to ensure the Form 5500 serves as an appropriate transparency and financial accountability tool for retirement plans, including MEPs and pooled employer plans (PEPs). 

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. Among its goals are:

  • modernizing the financial and other annual reporting requirements on the form;
  • continuing to make the investment and other information on the form more data mineable; and 
  • 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. 

Visit our SECURE Act resource center!


IRS 

To better identify plans that are not in compliance, the IRS is proposing the following changes to the 2022 forms, schedules, and instructions, including adding the proposed Schedule DCG, so that certain questions are answered at the individual plan level (not the DCG level) in order for a plan’s annual reporting obligation to be satisfied by a DCG Form 5500 filing: 

  • Add a nondiscrimination and coverage test question to Form 5500, Form 5500-SF, and proposed Schedule DCG that was on the Schedule T before it was eliminated. The question asks if the employer aggregated plans in testing whether the plan satisfied the nondiscrimination and coverage tests of Code Sections 401(a)(4) and 410(b). 
  • Add a question to Form 5500, Form 5500-SF, and proposed Schedule DCG, for 401(k) plans that would ask whether, if applicable, the plan sponsor used the design-based safe harbor rules or the “prior year” or “current year” ADP test. 
  • Add a question to Form 5500, Form 5500-SF,18 and proposed Schedule DCG asking whether the employer is an adopter of a pre-approved plan that received a favorable IRS Opinion Letter, the date of the favorable Opinion Letter, and the Opinion Letter serial number. 

The proposal also includes certain changes to Schedules MB, R and SB designed to improve reporting by DB plans subject to Title IV of ERISA. 

Comment Period

The DOL will accept written comments on all facets of the proposed forms and instruction changes. It asks that commenters take into account the costs and burdens to plans, participants, beneficiaries, plan fiduciaries, plan service providers and other affected parties; it also welcomes suggestions regarding alternatives.

All submissions must include the agency name and Regulatory Identifier Number (RIN) for this rulemaking. The number is RIN 1210–AB97. Comments may be submitted by:

  • Using the federal eRulemaking Portal, http://www.regulations.gov
  • Sending through the mail to: Office of Regulations and Interpretations, Employee Benefits Security Administration, Room N–5655, U.S. Department of Labor, 200 Constitution Ave. NW, Washington, DC 20210, Attention: Proposed Form 5500 Revisions RIN 1210–AB97. 

Comments must be received within 45 days of the publication of the proposed changes in the Federal Register, which is scheduled to take place on Sept. 15, 2021.

Editor's Note: For Pete Swisher's first take on the proposed rules, click here.

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