August 31, 2022
New Compliance Requirements Impacting Form 5500
The Department of Labor (DOL), in conjunction with the IRS, recently updated Form 5500 (Annual Return/Report of Employee Benefit Plan) to reflect changes required by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). The SECURE Act brought about a number of changes for retirement and employee benefit plans, including the following updates to Form 5500 that are being implemented for filing year 2021:
- Enhanced reporting requirements for multiple-employer filings,
- Established reporting requirements for pooled plans, and
- Updated informational requirements designed to enhance reporting transparency.
Multiple-Employer Defined Contribution Pension Plans
These plans are required to report the account balance of each organization participating in the plan in the specified attachment to Form 5500. All other multiple employer pension and welfare plans may utilize the existing reporting structure, and are exempt from disclosing account balances by employer.
Pooled Employer Plans
The SECURE Act increased flexibility for employers with the creation of the pooled employer plan. This new type of plan allows employers lacking commonality (either geographic or industry) to create retirement benefit plans arranged similarly to multiemployer plans and file a single Form 5500. This change allows greater flexibility for organizations that ordinarily would not be able to participate jointly in a retirement plan to offer greater flexibility to their employees. To accommodate this plan type, the instructions for Form 5500 were revised to specify that pooled employer plans must indicate that they are a multiemployer plan for purposes of the Form, and include the multiemployer plan attachment that specifies participating employer information. Additionally, pooled employer plans must indicate their compliance with the DOL Form PR (the required Form for both registration and the required reporting of certain plan events by pooled employers) and include their most recent Form PR filing confirmation number.
The advent of pooled employer plans and increasing plan complexities are driving enhancements to Form 5500 to increase its informational relevance and comparability.
- Multiemployer defined benefit plans must specify the withdrawal liability payment amounts included in employer contributions on Schedule MB.
- Form 5500-EZ (a simplified version of Form 5500 that certain smaller benefit plans qualify to file) may now be filed electronically online through EFAST2 (the DOL’s online filing system), eliminating certain software requirements.
- Foreign or “one-participant” plans may no longer file Form 5500-SF, and must instead paper file Form 5500-EZ with the IRS.
- Various changes to the form to increase transparency.
Employee benefit plans have complex reporting requirements. If you have questions about how these changes might affect your organization, please reach out to members of the Nonprofit Tax Team: Andrew Hassler, and J. Calvin Marks.