Changes are coming to Form 5500 relating to Multiple Employer Plans/Pooled Employer Plans in particular, and you can thank the 2019 SECURE Act for them.
The Department of Labor’s Employee Benefits Security Administration, IRS and the Pension Benefit Guaranty Corp. are seeking public comments on proposed revisions to the Form 5500 Annual Return/Report filed by private-sector employee benefit plans that were issued on Sept. 14.
The proposed changes are designed primarily to implement provisions in the SECURE Act relating to statutory amendments to the Employee Retirement Income Security Act and the Internal Revenue Code. At the same time, EBSA is publishing a notice of proposed changes to its implementing regulations under Title I of ERISA.
“The proposed form changes and related regulatory amendments address Setting Every Community Up for Retirement Enhancement Act changes, especially for multiple-employer plans, and improve this critical enforcement, research and public disclosure tool,” said Acting Assistant Secretary for Employee Benefits Security Ali Khawar. “The proposed changes would support the agencies’ oversight of employee benefit plans, provide better public access to Form 5500 data and allow interested private sector and other governmental stakeholders to expand their use of Form 5500 data in ways that help plan sponsors, fiduciaries and participants and beneficiaries understand their plans and plan investments better.”
So what are these proposed changes?
In addition to implementing the SECURE Act, the DOL said in a statement the proposed changes include a limited number of other improvements to the annual return/report forms and instructions. The key proposed forms revisions and the proposed changes to the department’s implementing regulations would do the following:
• Modify the Form 5500 Annual Return/Report and the department’s regulations to implement the SECURE Act requirement for the department and the Department of the Treasury to develop a consolidated annual report for groups of defined contribution retirement plans. The proposal would establish a new type of direct filing entity called a Defined Contribution Group Reporting Arrangement and add a new Schedule DCG (Individual Plan Information) that such reporting groups must file, in addition to meeting more generally applicable Form 5500 requirements for large pension plans.
• Modify the Form 5500 Annual Return/Report to reflect pooled employer plans (PEPs) as a new type of retirement plan and implement SECURE Act changes to multiple-employer pension plans’ reporting of participating employer information by establishing a new Schedule MEP (Multiple-Employer Retirement Plan Information).
• Improve financial reporting for retirement plans in general, including PEPs, other MEPs and the new DCG reporting arrangements. The proposed improvements would add new fee and expense reporting requirements and enhance the format and content of the existing schedules of assets held for investment.
• Expand the number of defined contribution pension plans that would be eligible for small plan simplified reporting options, including the conditional waiver of the independent qualified public accountant annual audit.
• Add questions to improve financial and funding reporting by PBGC-covered defined benefit pension plans and to improve oversight and compliance of tax-qualified retirement plans.
The Form 5500 Annual Return/Report serves as the principal source of information and data available to the agencies concerning the operations, funding and investments of more than 800,000 pension and welfare benefit plans that file the annual return/report.
The regulatory impact analysis for the proposal estimates that the total number of filers would decrease as a result of the pooled employer plan and DCG reporting provisions by nearly 20,000 filers, and that the overall reporting burdens would decrease by approximately $64.6 million annually, $63.9 million annually in audit cost savings and $700,000 annually in other reporting costs.
If adopted, the proposed changes generally would be effective for plan years beginning on or after Jan. 1, 2022.
Forms for the 2022 plan year are filed generally beginning in July 2023. A limited number of SECURE Act changes to MEP reporting of participating employer information and changes requiring reporting of basic identifying information for PEPs would apply to the 2021 plan year forms using an interim nonstandard attachment in place of the new Schedule MEP that would not apply until the 2022 plan year.
Publication of the proposals in the Federal Register on Sept. 15 started a 45-day comment period which ends on Oct. 30. Submit public comments electronically to the Federal eRulemaking portal. All submissions must include the agency name and Regulatory Identifier Number for this rulemaking, which is RIN 1210–AB97. All comments received will be posted online and be available publicly at www.regulations.gov and on the EBSA website, as well as in the EBSA Public Disclosure Room.
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