Agencies Propose Changes to Form 5500 Annual Report Filed for Retirement Plans

On September 14, 2021, the Department of Labor, Department of the Treasury, and Pension Benefit Guaranty Corporation (collectively, “agencies”) released proposed rules regarding changes to the Form 5500 requirements, most of which will affect the filing requirements for retirement plans. The proposed changes include both revisions to the content of the forms and changes to certain Form 5500 regulations.

Employers that sponsor ERISA benefit plans have compliance obligations regarding the annual filing of Form 5500, which is generally due within seven months of the close of the plan year (unless an extension is filed). Form 5500, including all required schedules and attachments, is used to report certain funding and operational information to the DOL concerning employee benefit plans subject to ERISA. In addition, failure to comply with the Form 5500 filing requirements timely can result in penalties under both ERISA and the IRS Code.

The proposed changes mostly incorporate amendments to the Code and ERISA as originally made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

Highlights of the proposed changes (which are quite extensive) include, but are not limited to:

• Modifying the Form 5500 instructions so that a single aggregated Form 5500 can be filed for a defined contribution group (DCG) reporting entity, and including a new Schedule DCG that would report plan-level information. In addition, an independent qualified public accountant must audit the single shared trust (with plan-level auditor’s report and financial statements attached to the Schedule DCG if a participating plan is also required to be audited). To file a single aggregated Form 5500, plans must verify that they meet the DCG eligibility requirements.
• Adding a new Schedule MEP (Multiple Employer Plan) to the Form 5500 to be used to report the MEP and related participating employer and contribution information. There is also a new type of defined contribution pension plan permitted by the SECURE Act, a PEP, which is operated by a pooled plan provider (PPP) and allows unrelated employers to participate in the plan without a common interest. A PEP would also complete the newly proposed Schedule MEP. Part III of the Schedule MEP includes information specific to PEP compliance (with several additional proposed revisions to the Form 5500 related to PEPs). The proposed rules add a checkbox to Form 5500 to indicate that a Schedule MEP will also be included with the filing, and all MEPs (including PEPs) and all DCGs are required to file Form 5500 regardless of size (with no option to file Form 5500-SF).
• Changing how defined contribution plan participants are counted, which expands the availability of simplified Form 5500 filing. The determination of a “small plan” would be based only on the number of participants with account balances (versus the number eligible to participate).
• Adding questions regarding nondiscrimination testing.
• Standardizing schedules for investment assets that include new questions regarding plans’ trusts and trustees.
• Requiring MEWAs (Multiple Employer Welfare Arrangements) that offer coverage for medical benefits to include a list of participating employers in the Form M-1. (MEWAs providing other types of benefits would continue to utilize the Form 5500 to provide required information.) Certain MEWAs will also be required to include a good faith estimate of each participating employer’s percentage of the total contributions made by all participating employers during the plan year.

As mentioned, these rules are only proposed at this time and are not yet final. Comments on the proposed rules are being solicited and must be received by the DOL on or before November 1, 2021. If adopted, the proposed changes would generally be effective for plan years beginning on or after January 1, 2022; however, changes to reporting requirements for MEPs would apply for plan years beginning on or after January 1, 2021.

Employers should be aware of these developments, and we will continue to monitor and communicate any updates accordingly.

Proposed Revision of Annual Information Return/Reports »
Press Release »