ARA GAC Wins Big Concessions on 2017 Form 5500

In a big win for the lobbying efforts of the American Retirement Association’s Government Affairs Committee (GAC), the IRS has dropped a series of compliance questions from the 2017 Form 5500.

The announcement came along with the release of advance informational copies of the 2017 Form 5500 from the U.S. Department of Labor’s Employee Benefits Security Administration, the IRS and the Pension Benefit Guaranty Corporation (PBGC). The “Changes to Note” section of the 2017 instructions note that the IRS-only questions that filers were (eventually) not required to complete on the 2016 Form 5500 have been removed from the Form 5500, Form 5500-SF and Schedules, including preparer information, trust information, Schedules H and I, lines 4o, and Schedule R, Part VII, regarding the IRS Compliance questions (Part IX of the 2016 Form 5500-SF).

Option ‘Null’?

On Dec. 1, 2016, the American Retirement Association Government Affairs Committee filed a comment letter in response to a request for comments on the proposal to “modernize and improve Form 5500,” explaining that the ARA was concerned that the Proposal significantly underestimates the cost and burden to comply with the reporting requirements and that there is insufficient time to make the technology and procedural updates required for the proposed 2019 plan year effective date.

The IRS took a similar action concerning the 2015 plan year, announcing on Dec. 3, 2015 that those questions – first proposed late in 2014 – would be optional for the 2015 plan year. ASPPA GAC filed an IRS comment letter on them in February 2015.

‘Signature’ Accomplishment

In another significant win, concerns raised by the ARA GAC on the requirement to obtain manual signatures (a.k.a. “wet” signatures) were addressed with the announcement that the instructions for authorized service provider signatures have been updated to reflect the ability for service providers to sign electronic filings on the plan sponsor and Direct Filing Entity (DFE) lines, where applicable, in addition to signing on behalf of plan administrators.

These are huge accomplishments on behalf of ARA, and our special thanks to Janice Wegesin, Peter Gould and the rest of the R&D subcommittee for their hard work on this issue!

The other changes announced were:

  • Instructions have been updated to reflect an increase in the maximum civil penalty amount assessable under the Employee Retirement Income Security Act section 502(c)(2) required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Department regulations published on Jan. 18, 2017, increased the maximum penalty to $2,097 a day for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report).
  • Line 4 of the Form 5500 and Form 5500-SF have been changed to provide a field for filers to indicate the name of the plan has changed.
  • The instructions for line 6c have been updated to add mortality codes for several variants of the RP-2014 mortality table and to add a description of the mortality projection technique and scale to the Schedule MB, line 6 – Statement of Actuarial Assumptions/Methods.
  • Form 5500-SF-Line 6c. Line 6c has been modified to add a new question for defined benefit plans that answer “Yes” to the existing question about whether the plan is covered under the PBGC insurance program. The new question asks PBGC-covered plans to enter the confirmation number – generated in the MPAA system – for the PBGC premium filing for the plan year to which the 5500-SF applies. For example, the confirmation number for the 2017 premium filing is reported on the 2017 Form 5500-SF.

Information copies of the forms, schedules and instructions are available online here.

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