United States: New Legislation Extends Future Form 5500 And 990 Deadlines, Affects Veterans Health Benefits And Extends Excess Pension Asset Transfer Rules

On July 31, 2015, President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, temporarily extending the Highway Trust Fund to provide continued funding for federal transportation projects. Tucked away in this three-month stopgap bill were several important employee benefits provisions. Specifically, the legislation includes provisions that affect the deadlines for filing future Form 5500 and Form 990 series information returns, modifies rules relating to the ability of veterans to participate in health savings accounts (HSAs), allows employers to disregard employees receiving certain veterans benefits when determining whether they are subject to the shared responsibility requirements of the Affordable Care Act (ACA) and further extends the ability of employers to use excess pension assets to pay for retiree health and group-term life insurance.

Form 5500 Deadline Extended

Plan administrators generally must file a plan's Form 5500 (the annual return for an employee benefit plan) by the last day of the seventh month after the plan year ends (July 31st for calendar year plans). Under current law, a plan administrator may obtain a one-time extension of this deadline for up to 2 ˝ months (October 15th for calendar year plans). However, the new law directs the secretary of treasury to modify existing regulations to provide for a 3˝ month extension for plan years beginning after December 31, 2015, meaning administrators of calendar year plans will now have until November 15, 2017, to submit a plan's 2016 Form 5500.

This extended deadline also is expected to affect the due dates for certain notices, returns and reports with deadlines tied to the due date for a plan's Form 5500 filing. For example, a plan administrator currently is required to file a Summary Annual Report (SAR) within a certain number of months after the plan's Form 5500 is due, and a Form 8955-SSA at the same time as Form 5500. Similar timing rules also may impact the date by which the plan sponsor of a small defined benefit pension plan (a plan with 100 or fewer participants) must distribute the plan's annual funding notice to plan participants.

Form 990 Deadline Also Extended

The deadline for tax-exempt organizations (including Voluntary Employees' Beneficiary Associations (VEBAs)) to file their annual information returns is similarly extended for tax years beginning after December 31, 2015. Tax-exempt organizations generally are required to file a Form 990 series return within 4 ˝ months following the end of the organization's taxable year.  Current law provides that an organization may obtain up to two three-month extensions to this deadline, only one of which is automatic, by filing a Form 8868. The new law modifies this rule and provides for a one-time, automatic six-month extension to the Form 990 filing deadline.  For tax-exempt organizations that operate on a calendar year basis, this means they will be able to receive an automatic extension until as late as November 15th to submit their Form 990 information return.

Additional HSA Eligibility for Veterans

The new law also eliminates restrictions that limited the ability of many veterans to make HSA contributions. Under current law, an individual is not eligible to make HSA contributions for any month if the individual receives medical benefits through the Department of Veterans Affairs (VA) at any time during the previous three months. As a result, many veterans have historically been prohibited from making HSA contributions. Effective January 1, 2016, the new law eliminates the three-month-period restriction and clarifies that veterans receiving hospital care or medical services through the VA for a service-connected disability may make pre-tax contributions to an HSA.

Employees Receiving Veterans Benefits Disregarded for Certain ACA Purposes

The new law also impacts how veterans are required to be counted by employers for purposes of the shared responsibility rules under the ACA. Specifically, employers may choose to disregard employees receiving health coverage through TRICARE (a health care program of the U.S. Department of Defense) and certain designated health care programs provided by the VA when determining whether the employer is an "applicable large employer" under the ACA. This change applies retroactively to determinations made in 2014.

Because only "applicable large employers" (i.e., those who employ 50 or more full-time and full-time equivalent employees) are subject to the shared responsibility employer mandate, this change may allow a small number of employers to avoid being subject to the rules governing employer shared responsibility.

Extension of Ability to Transfer of Excess Pension Assets

In addition to its impact on the treatment of veterans for certain purposes, the new law also extends until December 31, 2025, the period during which employers have the ability to transfer excess pension assets to fund retiree health benefits or retiree group-term life insurance (often referred to as Section 420 transfers). Under current law, the ability to do so was scheduled to sunset on December 31, 2021.

New Legislation Extends Future Form 5500 And 990 Deadlines, Affects Veterans Health Benefits And Extends Excess Pension Asset Transfer Rules

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