2020 Form 5500, Schedules, and Instructions
The DOL, IRS, and PBGC have released informational copies of the 2020 Form 5500 series, including Schedules and Instructions. (As a reminder, these copies cannot be used for filing; with very limited exceptions, Form 5500 must be filed electronically.) Here are highlights of changes relating to welfare and 401(k) plan filings:
One-Participant Plans and Foreign Plans Must Use Form 5500-EZ. The instructions for Forms 5500, 5500-EZ, and 5500-SF have been revised to reflect that, for plan years beginning after 2019, one-participant and foreign plans may no longer use Form 5500-SF and must use Form 5500-EZ. Consequently, the Form 5500-SF, Part I, Line A no longer includes check boxes for one-participant or foreign plans. (This change affects only retirement plans; welfare plans cannot use Form 5500-EZ.) The Form 5500-EZ must be filed electronically by filers of 250 or more returns of any type with the IRS in a calendar year (subject to a hardship exception). Others may file Form 5500-EZ electronically or on paper. One-person or foreign plans that filed electronically on Form 5500-SF for plan years prior to 2020 must submit amendments to those filings electronically on Form 5500-SF; they no longer have the choice of amending using paper Form 5500-EZ. While information filed on Form 5500-EZ generally must be available to the general public, one-participant and foreign plan information will not be published on the internet, regardless of how the Form 5500-EZ is filed.
Accountant’s Opinion. The instructions for Schedule H, Part III (Accountant’s Opinion) have been updated in response to a new auditing standard (SAS 136) that allows the issuance of a form of unmodified opinion when an audit’s scope has been limited pursuant to certain DOL regulations. Line 3b of Schedule H has been revised to add check boxes to indicate whether the audit was performed pursuant to those DOL regulations.
Counting Multiemployer Plan Inactive Participants. Line 14 of Form 5500 Schedule R now gives multiemployer plans three methods to count inactive participants. If a plan’s selection causes the reported number to differ from what was previously reported, an explanation for the difference must be attached.
Annually Adjusted Penalties. The instructions have been updated throughout to reflect the current maximum penalty for Form 5500 filing failures ($2,233 per day). Filers are also reminded to check for increases, as required annual adjustments take place after these forms and schedules have been published (see our Checkpoint article).
Increased Required Minimum Distribution Age. The instructions for Form 5500 Schedules H and I (Line 4l) and Form 5500-SF (Line 10f) have been revised to reflect the higher required minimum distribution age of 72 (up from 70½) established by the SECURE Act (see our Checkpoint article).
EBIA Comment: Although the changes for 2020 are not extensive, those responsible for filing should review the updated instructions carefully to ensure complete and accurate filing of Form 5500 and any necessary Schedules. Those with responsibility for filing returns for one-participant plans and foreign plans need to ensure that they begin using the Form 5500-EZ for plan years beginning after 2019. In April, the effective date for SAS 136 was delayed (it now applies for audits of periods ending on or after December 15, 2021), but we understand that early implementation is permitted, and based on the content of the schedule it appears that the DOL believes that the revised Schedule H can be used regardless of the delay. For more information, see EBIA’s ERISA Compliance manual at Section XXII (“Annual Form 5500 Reporting to the DOL”) and EBIA’s 401(k) Plans manual at Section XXXI (“Plan Administration: Annual Form 5500 Reports and SARs”). See also EBIA’s Cafeteria Plan’s manual at Section XXXIV (“Form 5500 and Other Reporting Requirements”) and EBIA’s Self-Insured Health Plans manual at Section XXIX.B (“Annual Form 5500 Reporting”).
Contributing Editors: EBIA Staff.