Case of the Week: Form 5500 Compliance Questions

The ERISA consultants at the Retirement Learning Center Resource regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and executive compensation arrangements. A recent call with a financial advisor from California is representative of a common inquiry related to Form 5500. The advisor asked:

“For the past couple of years, the IRS has added some extra compliance questions to the Form 5500 and related schedules — but told plan sponsors not to answer them. What is the current status of these questions?”

Highlights of Discussion

You are correct. For the 2015 and 2016 filings, the IRS added compliance questions to Forms 5500, 5500-SF, 5500-EZ and Schedules H, I and R. But, for each year, the IRS later instructed filers not to answer them. The IRS removed these additional questions from the 2017 version of Form 5500 and related schedules, which plan sponsors will file later in 2018 (see the 2017 Instructions to Form 5500), saying:

IRS-only questions that filers were not required to complete on the 2016 Form 5500 have been removed from the Form 5500 and Schedules, including preparer information, Schedules H and I, lines 4o, and 6a through 6d, regarding distribution during working retirement and trust information, and Schedule R, Part VII, regarding the IRS Compliance questions.

Be aware, however, that the DOL/IRS/PBGC are working on a long-term project that would improve and modernize Form 5500 in the areas of financial and other annual reporting requirements, and make the investment and other information more data mineable. We expect more updates to come in 2018.

Conclusion

The on again, off again additional IRS compliance questions on Forms 5500 are officially off the 2017 version of the forms that plan sponsors will file in 2018. There is more to come regarding a long-term project to overhaul the forms.

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“Case of the Week” is the winner of an APEX Award for Publication Excellence for 2017.

Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Consumers should consult with their tax advisor or attorney regarding their specific situation.

©2018, Retirement Learning Center, LLC. Used with permission.

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