The Department of Labor (DOL) requires retirement and welfare plans to file annual reports on Form 5500 electronically beginning with the 2009 plan year. In connection with the shift from paper to all-electronic filing, the DOL has released a series of FAQs regarding the new program, dubbed EFAST2. A copy of them and other program information may be accessed at www.efast.dol.gov .
Highlighted Material Features of New EFAST2 Regime
- Effective Date: EFAST2 is effective for plan years beginning on or after Jan. 1, 2009, meaning that plans must now file using the new filing system.
- Covered Plans: Almost all retirement plans (including Code Section 403(b) plans) and welfare plans must file annual reports electronically.
- Plans that cover only the sole owner or partners in a partnership and no other employees are exempt from the electronic filing requirement. These plans should report on Form 5500-EZ or Form 5500-SF (plans that do not hold employer stock).
- Delinquent / Amended Reports: Plan sponsors must also use the new system for filing delinquent or amended reports.
- Delinquent or amended 2008 plan year filings may be made through the EFAST2 system. However, plan sponsors may also continue to submit paper or electronic filings via the original EFAST system until Oct. 15, 2010.
- Delinquent or amended Forms 5500 submitted through EFAST2 for
plan years prior to 2009 should be submitted using the current year
Form 5500, schedules and instructions, with some exceptions.
- Plan sponsors should use the correct year schedules and
instructions for the following schedules:
- Schedule B, SB, MB (actuarial information); Schedule E (ESOP information); Schedule P (annual return of fiduciary of employee benefit trust); Schedule R (retirement plan information; and Schedule T (qualified pension plan coverage information).
- Plan sponsors should use the correct year schedules and instructions for the following schedules:
- For plan years 2009 and later, plan sponsors must amend annual reports by checking the "amended return/report" box and resubmitting the entire amended document, including all schedules and attachments.
- Filing Software: The DOL provides free filing software, called IFILE. However, plan sponsors may also use approved third-party software or engage third-party service providers to make filings that have been signed by authorized persons.
- Large volume filers may wish to consider using third-party software, as DOL software is designed for sponsors filing a relatively low number of annual reports (2 - 3).
- Electronic Signatures: Plan sponsors must go to the DOL website to obtain electronic signature credentials. Credentials are specific to each company officer authorized to sign annual reports. Each potential electronic signatory must obtain his or her own credentials.
- Electronic signatures in EFAST2 are different from the EFAST system, and signers, authors, transmitters, and software developers will all likely need to register for new electronic credentials.
- Third-party administrators may not obtain electronic signature
credentials on behalf of clients. Plan sponsors may not provide
third-party administrators with their electronic credentials.
- Third-party administrators who manage the Form 5500 filing process may obtain their own signer credentials, and may attest they are authorized signatories.
- In these cases, the third-party signatory must also attach a PDF of the Form 5500 that has been manually signed and dated by the plan administrator under penalty of perjury.
- Actuaries and accountants need not obtain electronic signature credentials. However, their reports must be manually signed and attached to the Form 5500 as a PDF.
- Submission of Annual Reports: Plan sponsors should be careful to review their annual reports before submitting them via the EFAST2 system. The IFILE system permits plan sponsors to "validate" filings before final submission. The validation process will perform an initial check for errors.
- Any uncorrected errors will automatically be flagged on final submission.
- Accountant Reports: Audit reports by independent qualified public accountants must be documented on letterhead, signed and saved as a PDF file. The PDF file should be electronically attached to the Form 5500. Once attached, the PDF of the audit report will be transmitted to EFAST2 with the rest of the annual report.
- Submissions without required audit reports will be marked as incomplete, which could lead to additional review, rejection, and potential civil penalties.
- Receipt of Annual Report: Once submitted, plan sponsors will receive an "Acknowledgement ID" message that signifies EFAST2 received an electronic envelope.
- The message does not necessarily mean EFAST2 received the actual filing.
- Plan sponsors should check the filing status of their submissions using the filing software or via the EFAST2 website. Any person may check the status of a filing by calling the EFAST2 helpline at 1-866-GO-EFAST.
- Extensions: Plan sponsors who file for an extension of time on Form 5558 via the EFAST2 system no longer need to include the Form 5558 with their Form 5500 submission. However, plan sponsors must keep a copy of the Form 5558 with their plan records.
- Online Disclosure: Nearly all filings submitted through EFAST2, including all schedules and attachments, will be available to the general public through the DOL website at www.efast.dol.gov. There are no registration requirements to view filings online.
- The EFAST2 website will generally display filings within one day of receipt.
Plan sponsors should begin now to prepare to make annual disclosures via EFAST2 by familiarizing themselves with the new system, and by ensuring that all appropriate members of their organizations obtain electronic signature credentials. Plan sponsors utilizing third-party vendors to prepare and file their annual reports should work with their vendors to set up processes to share and review filings, decide who will file the Form 5500, and obtain additional electronic signature authority as necessary.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.