New regulations ‘electrify’ Form 5500 filers

Uncle Sam is giving employers with qualified retirement plans a reprieve from new electronic filing requirements.

Alert: New regulations relating to Form 5500, Annual Return/Report of Employee Benefit Plan, have been issued to reflect changes in the Pension Protection Act of 2006 (PPA). The electronic filing requirement mandated by the PPA has been postponed for one year.

The new regulations generally apply to plan years beginning after 2008. This gives employers more time to meet the requirements.

In addition to the delay, the federal government has modified Form 5500 and created a new short form (Form 5500-SF) for small pension and welfare plans. The changes represent a joint effort by the U.S. Department of Labor (DOL), the Pension Benefit Guaranty Corporation (PBGC) and the IRS. Here are the highlights:

  • Separate actuarial schedules: Schedule B, Defined Benefit Plan Actuarial Information, of Form 5500 is being replaced by two separate actuarial schedules for those defined benefits plans subject to the minimum funding standards. Other actuarial schedules have been revised for single-employer defined benefits plans, multiple-employer defined benefits pension plans and money purchase plans.
  • Insurance and service providers: Schedule A, Insurance Information, which must be attached to Form 5500 when a plan has investment contracts with an insurance company, contains several technical changes. It also includes a space for reporting an insurance company’s failure to provide information. Schedule C, Service Provider Information, must be filed only by certain large plans. The instructions for Schedule C include revisions designed to disclose plan-related fees and expenses.
  • Retirement plan information: Several questions have been added to Schedule R, Retirement Plan Information. The new regs also increase reporting requirements for multiemployer—defined benefits pension plans as to contributing employers, plan mergers, withdrawing employers and liabilities, and participants for whom no contributions are made. To provide the PBGC with information on plan funding for the 2008 plan year, large single-employer and multiemployer defined benefits plans will have to report information on asset allocations and debt portfolios.
  • 403(b) plans: Reporting and auditing requirements have been added for 403(b) plans with 100 or more participants (assuming such plans are covered by the Employee Retirement Income Security Act [ERISA]).
  • New short form: Although new Form 5500-SF has been approved for use by eligible small pension and welfare plans (i.e., single-employer plans with less than 100 participants), it will not be available until electronic filing kicks in for the 2009 plan year.
  • Form 5500 schedules utilized solely by the IRS will be eliminated once the electronic filing system is in place.

Advisory: Some form revisions will apply to the 2008 tax year on a transitional basis. All others will be implemented for the 2009 plan year in connection with the switch to electronic filing.

Reprinted with permission from The Tax Strategist, August 2008. For continuing advice on this and numerous other tax strategies, go to Receive 2 FREE Bonus Reports and a 40% discount on The Tax Strategist when you use Promo Code WN0013.


Reprinted with permission from The Tax Strategist, August 2008. For continuing advice on this and numerous other tax strategies, go to Receive 2 FREE Bonus Reports and a 40% discount on The Tax Strategist when you use Promo Code WN0013.

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