Form 5500 Series for 2016 Plan Year Released by DOL

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Form 5500 Series for 2016 Plan Year Released by DOL

The DOL has officially published Form 5500 for its 2016 Plan Year. The released Form 5500 series includes Form 5500-SF, Instructions, and Schedules; and these advance information copies can so far not be filed, except in rare circumstances. Nonetheless, electronic filing of Form 5500 is still mandatory. Even though few changes have been introduced in the Schedules; Form 5500, including its main body, remains unchanged. Besides, the Instructions, along with separate IRS Guidance, calls for the skipping of IRS Compliance Questions, and also allows filers to omit the requested preparer information. Even so, the Instructions note that the maximum penalty associated with Form 5500 failures have been increased to $2,063 per day from the previous penalty of $1,100 per day. There are also changes made to matters relating to 401(k) plan and welfare filings. These changes have been summarized below:

1. Schedule A focuses entirely on insurance information. In line with this, it has excluded information pertaining to both Part III (which deals with information pertaining to Welfare Benefit Contract) and Part IV (which governs Provision of Information). Even so, Schedule A has still managed to cover the insurance facets which are related to Part III and Part IV. According to EBIA, this may have been brought about by oversight issues, and it is more likely than not to be remedied. EBIA also noted that it is still possible to know if these sections have also been omitted in EFAST2, which is the Schedule A version that is filed electronically.

2. Schedules H and I: These are related schedules. Schedule H pertains to Financial Information, while Schedule I pertains to Financial Information-Small Plan. In both Schedules, questions 4o and 4p have been removed. Questions 4o focused on taxable income derived from sources unrelated to business, and question 4p dealt with in-service distributions for each plan year. Question 4o has been substituted with a clearly defined question that focuses on the benefit plan. Even so, both schedules have instructed filers to skip lines that request trust information.

3. Schedule R, which deals with Retirement Plan Information, has instructed filers to skip IRS Compliance Questions that appear in Part VII. Likewise, these questions have also been altered following the removal of lines covering plan amendments, ADP/ACP testing, and tax law changes. According to EBIA, these deletions reflect changes that are to be made in determination letter program.

According to a commentary provided by EBIA, DOL has decided to minimize the number of changes, as it prepares to introduce significant (key) changes and modifications to ERISA Form 5500. These major changes are expected to take effect in 2019 Plan Year, and filers are expected to understand and comply with them. Meanwhile, filers are now expected to file complete Form 5500s in time, and also ensure that the information contained therein is accurate and up-to-date. This is one of the reason for increasing the maximum penalty. It is also expected that when significant changes have been made, the potential maximum penalties are likely to be increased so as to achieve compliance. More information about these matters can be obtained from previous posts published by EBIA, especially those related to ERISA compliance, 401(k) plans, Cafeteria plans, and self-insured health plans.

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