WASHINGTON, DC – The U.S. Department of Labor’s Employee Benefits Security Administration, IRS and the Pension Benefit Guaranty Corp. are seeking public comments on proposed revisions to the Form 5500 Annual Return/Report filed by private-sector employee benefit plans that are designed primarily to implement provisions in the Setting Every Community Up for Retirement Enhancement Act of 2019. At the same time, EBSA is publishing a notice of proposed changes to its implementing regulations under Title I of the Employee Retirement Income Security Act.
In addition to implementing the SECURE Act, the proposed changes include a limited number of other improvements to the annual return/report forms and instructions. The key proposed forms revisions and the proposed changes to the department’s implementing regulations would do the following:
- Modify the Form 5500 Annual Return/Report and the department’s regulations to implement the SECURE Act requirement for the department and the Department of the Treasury to develop a consolidated annual report for groups of defined contribution retirement plans. The proposal would establish a new type of direct filing entity called a Defined Contribution Group Reporting Arrangement and add a new Schedule DCG (Individual Plan Information) that such reporting groups must file, in addition to meeting more generally applicable Form 5500 requirements for large pension plans.
- Modify the Form 5500 Annual Return/Report to reflect pooled employer plans as a new type of retirement plan and implement SECURE Act changes to multiple-employer pension plans’ reporting of participating employer information by establishing a new Schedule MEP (Multiple-Employer Retirement Plan Information). Additionally, for multiple employer welfare plans that provide medical benefits, the proposal would move the questions regarding participating employers that are currently part of the Form 5500 Annual Return/Report to the Form M-1 – Report for Multiple Employer Welfare Arrangement and Certain Entities Claiming Exception – and apply that reporting requirement to non-plan MEWAs that file the Form M-1.
- Improve financial reporting for retirement plans in general, including pooled employer plans, other MEPs and the new DCG reporting arrangements. The proposed improvements would add new fee and expense reporting requirements and enhance the format and content of the existing schedules of assets held for investment.
- Expand the number of defined contribution pension plans that would be eligible for small plan simplified reporting options, including the conditional waiver of the independent qualified public accountant annual audit.
- Add questions to improve financial and funding reporting by PBGC-covered defined benefit pension plans and to improve oversight and compliance of tax-qualified retirement plans.
“The proposed form changes and related regulatory amendments address Setting Every Community Up for Retirement Enhancement Act changes, especially for multiple-employer plans, and improve this critical enforcement, research and public disclosure tool,” said Acting Assistant Secretary for Employee Benefits Security Ali Khawar. “The proposed changes would support the agencies’ oversight of employee benefit plans, provide better public access to Form 5500 data and allow interested private sector and other governmental stakeholders to expand their use of Form 5500 data in ways that help plan sponsors, fiduciaries and participants and beneficiaries understand their plans and plan investments better.”
There are an estimated 2.5 million health plans, an estimated 885,000 other welfare plans and nearly 772,000 private pension plans in the U.S. These plans cover about 154 million private sector workers, retirees and dependents. The plans have estimated assets of $12.2 trillion. The Form 5500 Annual Return/Report serves as the principal source of information and data available to the agencies concerning the operations, funding and investments of more than 800,000 pension and welfare benefit plans that file the annual return/report.
The regulatory impact analysis for the proposal estimates that the total number of filers would decrease as a result of the pooled employer plan and DCG reporting provisions by nearly 20,000 filers, and that the overall reporting burdens would decrease by approximately $64.6 million annually, $63.9 million annually in audit cost savings and $700,000 annually in other reporting costs.
If adopted, the proposed changes generally would be effective for plan years beginning on or after Jan. 1, 2022. Forms for the 2022 plan year are filed generally beginning in July 2023. A limited number of SECURE Act changes to MEP reporting of participating employer information and changes requiring reporting of basic identifying information for PEPs would apply to the 2021 plan year forms using an interim nonstandard attachment in place of the new Schedule MEP that would not apply until the 2022 plan year.
Under ERISA and the Internal Revenue Code, unless exempt, pension and other employee benefit plans generally are required to file annual returns/reports concerning, among other things, the financial condition and operations of the plan. Filing a Form 5500 Annual Return/Report of Employee Benefit Plan, or a Form 5500-SF Annual Return/Report of Small Employee Benefit Plan – together with any required schedules and attachments – generally satisfies these annual reporting requirements.
Publication of the proposals starts a 45-day comment period. Submit public comments electronically to the Federal eRulemaking portal. All comments received will be posted online and be available publicly at www.regulations.gov and on the EBSA website, as well as in the EBSA Public Disclosure Room. The department will treat public comments submitted in response to this Notice of Proposed Forms Revisions as public comments on the Notice of Proposed Rulemaking and vice versa.