Newly proposed changes to benefit plan reporting on Form 5500 would have a significant impact not only on employers but also on participants, fiduciaries and third-party service providers.
The changes to the Form 5500 Annual Return/Report Series were proposed on July 21, 2016 as part of Notice of Proposed Revision of Annual Information Return/Reports from the Department of Labor (DOL), the IRS and the Pension Benefit Guaranty Corporation (PBGC)--collectively referred to as the "Agencies.". A Notice of Proposed Rulemaking for Annual Reporting and Disclosure to propose updates to the DOL's reporting regulations to implement the proposed forms was issued the same day. The package includes substantive changes intended to modernize and improve the information reported in the annual filings.
The proposed rules would make major changes across the various annual reporting schedules for employee benefit plans. Employers will be affected differently based on their current benefit plan structure, and smaller employers would be required to file for any plan regardless of size.
The changes would also affect service providers with employer relationships. Because most benefit plans are administered on a day-to-day basis by third-party administrators, employers will have to verify that service providers' systems and software can track the required information, can compile that information appropriately and can report the information accurately on the updated forms. Employers will also have to work closely with their recordkeeper, trustee, actuary, auditor, other fiduciaries and other plan providers to gather all the information the revised return will require.
While the proposed rules are not scheduled to go into effect until the plan years beginning in 2019 (filed in 2020), the Agencies noted that certain provisions could be implemented sooner or delayed depending on various factors, including feedback received during the public comment period.
See our Human Capital Services Insights for details on the new forms.
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