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Benefits

Agencies Finalize Form 5500 Revisions for Multiple Employer Plan Reporting

EBIA  

EBIA  

Final Forms Revisions: Annual Information Return/Reports, 26 CFR Part 301; 29 CFR Part 2520; 29 CFR Part 4065, 87 Fed. Reg. 31133 (May 23, 2022)

Available at https://www.govinfo.gov/content/pkg/FR-2022-05-23/pdf/2022-10658.pdf

The DOL, IRS, and PBGC have announced revisions to Forms 5500 and 5500-SF that apply to reporting for plan years beginning on or after January 1, 2022. The revisions finalize some of the changes proposed by the agencies in September 2021 (see our Checkpoint article) to reflect Code and ERISA amendments made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act (see our Checkpoint article). While many changes finalized in this action affect only defined benefit plans, a few—primarily relating to multiple employer plans (MEPs)—affect defined contribution plans (including 401(k) plans). Here are highlights of changes affecting 401(k) plan reporting:

  • “Plan Sponsor” and “Plan Administrator” Clarifications. Two new bullets have been added to the “plan sponsor” definition in the instructions for Form 5500 line 2a—one indicating that the plan sponsor for a pooled employer plan (PEP) is the pooled plan provider that operates the plan, and the other indicating that the professional employer organization (PEO) is the plan sponsor for a PEO plan. (References to pooled plan providers and PEOs have also been added to the line 2a “Note” about MEP filings.) Similar adjustments have been made to the instructions for Form 5500 line 3a, “plan administrator.” The Form 5500-SF instructions have been updated to add a definition of plan sponsor for line 2a (indicating that “plan sponsor” means the employer, an employee organization, an association or board of trustees, or a PEO, as applicable), and to add a PEO bullet to the definition of plan administrator for line 3a. [EBIA Comment: PEPs are not eligible to file Form 5500-SF, so no PEP or pooled plan provider references have been added to the Form 5500-SF instructions.]
  • New Plan Characteristics Codes. New codes have been added to the list used to complete Form 5500 lines 8a and 8b indicating the type of benefits provided. The new codes are:

    • 2U for a MEP that is an Association Retirement Plan;
    • 2V for a MEP that is a PEO plan;
    • 2W for a MEP that is a PEP; and
    • 2X for a MEP that does not fall under any of the above MEP categories.

    Codes 2U, 2V, and 2X (but not 2W) have been added to the corresponding list for Form 5500-SF line 9.

  • Form 5500-SF Filing Eligibility. In the Form 5500 Quick Reference Chart summarizing filing requirements for different types of plans, a footnote explains that certain small plans may be eligible to file Form 5500-SF instead of Form 5500. The footnote’s list of plans permitted to file Form 5500-SF has been revised to add plans that are not required to file Form M-1 and plans that are not pooled employer plans.
  • Caution Regarding Form PR. A new caution box in the instructions for Form 5500 line 3 warns PEP filers that they may receive correspondence from the DOL or IRS if the information on Form 5500 does not match the information on Form PR (Registration for Pooled Plan Provider) filed with the DOL.

news release explains that updated information copies of Form 5500 and Form 5500-SF will be available on the DOL website later in the year. (Currently, the changes are illustrated in appendices to the agencies’ action.) In addition, the agencies anticipate separately addressing other elements of the September 2021 proposal, including a new Schedule MEP for multiple employer plans, consolidated reporting for certain defined contribution reporting groups, and compliance questions addressing Code requirements such as nondiscrimination and coverage testing. Elements of the proposal that were first effective for 2021 plan years were finalized with the 2021 Form 5500 series (see our Checkpoint article).

EBIA Comment: These changes will be of particular interest to MEP plan sponsors and administrators, as well as employers who participate in MEPs and service providers and advisors who work with them. The next round of Form 5500 changes will likely have much broader impacts. For more information, see EBIA’s 401(k) Plans manual at Sections XXXI.E (“Completing the Form 5500”) and II.F.2 (“Multiple Employer Plans (MEPs)”). See also EBIA’s ERISA Compliance manual at Sections XIX.G (“Form M-1 Obligations for MEWAs and Participating Employers”) and XXII (“Annual Form 5500 Reporting to the DOL”).

Contributing Editors: EBIA Staff.

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