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Proposed Changes to Form 5500

On September 14, 2021, federal agencies announced proposed revisions to the Form 5500 Annual Return/Report. The changes are necessary to implement new requirements under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).

What is the Form 5500?

Under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Service (IRS) code, unless exempt, pension and other employee benefit plans are generally required to file annual returns/reports on the financial condition and operations of the plan. Form 5500 is used to satisfy annual reporting requirements under ERISA and IRS code. Based on plan size, employers are required to file annually either the Form 5500, Form 5500-SF, or Form 5500-EZ.

Why is the Form 5500 Required?

The Form serves as an important disclosure tool for the DOL, plan participants and beneficiaries, and other governmental agencies. The purpose of the annual reporting is to ensure “employee benefit plans are operated and managed in accordance with certain prescribed standards and that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.”

What is the SECURE Act?

Signed into law in December of 2019, the SECURE Act (Act) modified the requirements for employer-provided retirement plans, individual retirement accounts (IRAs), and other tax-favored savings accounts. The Act’s goal is to address the worker retirement savings gap by making saving for retirement easier for Americans.

The Act makes changes to defined contribution plans such as 401(k)s, defined benefit pension plans, and individual retirement accounts (IRAs) including, but not limited to expanding eligibility to part-time employees, raising catch-up contribution limits, allowing 401(k) matching contributions based on student loan payments, delaying required minimum distributions, and decreasing barriers on pooled Multiple Employer Plans (MEPs).

What are the Proposed Changes to the Form 5500?

The key proposed revisions to the Form 5500 would:

  • Consolidate the annual report for groups of defined contribution retirement plans
  • Modify the annual report to reflect pooled employer plans as a new type of retirement plan and establish a new Schedule MEP
  • Expand the number of defined contribution pension plans that would be eligible for small plan simplified reporting options

If the changes are adopted, they would generally be effective for plan years beginning on or after January 1, 2022.

Additional Information

The U.S. Department of Labor (DOL) has issued a fact sheet summarizing the changes, in addition to publication of the Proposed Rule and the Notice of Proposed Form Revisions.

The DOL, Internal Revenue Services (IRS), and Pension Benefit Guaranty Corporation (PBGC) are seeking public comments on the proposed changes to the Form 5500. Employers who would like to submit comments on the proposed changes. Employers should note that public comments are due on or before November 1, 2021.

For additional information on Form 5500 annual reporting requirements and filing assistance, employers may visit the DOL’s Employee Benefit Services Administration website.

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