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Form5500help.com is designed to complement official guidance and other internet resources available to preparers of Form 5500 for qualified retirement and welfare benefit plans. Every year, businesses and organizations that sponsor an employee benefit plan subject to ERISA must file Form 5500. These forms are filed with the Employee Benefits Security Administrations EFAST operation in Lawrence, Kansas without regard to the plan year. All current, late, or amended filings are processed by EFAST. Plan sponsors and practitioners -- employee benefit consultants, accountants, attorneys, and other service-providers -- often find the instructions to the Form 5500 to be vague or ambiguous resulting in many hours of frustration while preparing the reports for both pension and welfare benefit plans. Form5500HELP.com offers practical advice to consider when completing the various forms and schedules associated with these filings. We also lead you to other websites so you can
Arlington, VA, March 31, 2008 Vangent, Inc., a leading global provider of information management and business process outsourcing solutions, today announced that the Department of Labor (DOL) has awarded the company a nearly $94 million contract to develop, implement, and manage the Employee Retirement Income Security Act (ERISA) Filing Acceptance System 2 (EFAST2) program. The DOL awarded Vangent a $15 million development contract as the first component of the 12-year, $94 million initiative. EFAST2 will enable electronic filing of employee pension and benefit plans while also enhancing multi-agency visibility and access to Form 5500 series filings. EFAST is the filing system for ERISA, which was enacted in 1974 to increase protection for workers’ pension plans and guarantee that pension rights are not unfairly denied or taken from eligible employees. ERISA serves to protect the pension and benefit plans that cover 150 million eligible employees and their dependents, and include assets of approximately $6 trillion. The Vangent EFAST2 contract features the development of a secure Web portal to streamline electronic filing and processing of approximately 1.1 million employee benefit plan reports. The Web portal will also enable the DOL and its partner agencies, the Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) to review the electronic Form 5500 series filings and ensure employer compliance with pension and benefit plan mandates. Vangent will also continue to staff and manage an EFAST contact center to support the organizations that file Form 5500 series documents annually. “The Department of Labor Employee Benefits Security Administration is central to maintaining a fair work environment and safeguarding employees’ retirement funds,” said Mac Curtis, president and CEO of Vangent, Inc. “We are proud to continue our longstanding relationship with the Department of Labor and look forward to working together to provide EFAST2 electronic filing and enhance multi-agency review of these important documents.” The EFAST2 contract extends Vangent’s 10-year relationship with the DOL. The DOL first awarded Vangent the EFAST contract in 1998 to develop, implement, and manage a sophisticated imaging, data capture, and data management solution that fulfills more than 400 program deliverables, applies more than 200 data edits, and more than 1,000 data verification and validation checks for each submission. Vangent also operates the EFAST Help Line to support employers’ questions that include initial filing queries through filing revisions required. The contact center includes a cost-effective Interactive Voice Response (IVR) and Frequently Asked Questions (FAQ) features as well as live customer service support. Vangent EFAST2 program partners include IBM Global Business Services, Buccaneer Computer Systems and Services, Inc., HeiTech Services, Inc., NATEK Inc., and Riojas Enterprises, Inc. On Wednesday, October 10, 2007, the Department of Labor (DOL) unveiled the 2007 Form 5500 package which included new rules that reflect sections of the Pension Protection Act affecting “small” plans, one-participant plans, and those defined benefit plans filing Schedule B. Shortly thereafter, the Internal Revenue Service (IRS) posted the 2007 Form 5500-EZ and its instructions. [See http://www.dol.gov/ebsa/5500main.html and http://www.irs.gov/pub/irspdf/i5500ez.pdf.] Practitioners are particularly interested in how the agencies addressed the new rules in PPA §1103 which were intended to make reporting easier for small employers. If the Instructions for 2007 Form 5500 are any indication, a “simplified report” is defined by folks in Washington much differently than it is elsewhere. Relief for Small Plan Filers The requirements for the Voluntary Alternative Reporting Option for Certain Plans with Fewer than 25 Participants are not suggested by the statutory language or legislative history; however, in its December 2006 updated proposals to Form 5500, the DOL stated in the preamble that “Specifically, the Department anticipates that the simplified report will to a large extent replicate within the context of the existing Form 5500 Annual Return/Report structure the information that would be required to be reported on the proposed Short Form 5500 (Form 5500-SF), possibly by allowing certain schedules to be excluded from the filing or requiring only certain line items to be completed on required schedules.” A look at the proposed Form 5500-SF (see page 13 of the document at http://www.dol.gov/ebsa/regs/fedreg/notices/2006006329.pdf) will cast a better light on how the DOL developed the 2007 simplified reporting guidelines. So just who is eligible to file under the new rules? For the 2007 plan year, single employer plans with fewer than 25 participants as of the first day of the plan year may choose to file the simplified annual report if:
What must be filed? The “simplified” Form 5500 report is comprised of:
Of course, the sponsor of an eligible small plan may opt to continue filing Form 5500 as it has in the past, including all schedules, without regard to the Alternative Reporting Option. There appears to be no rule prohibiting an eligible plan from filing something in between the simplified report described above and the “full” small plan report; however, it is unclear whether EFAST systems have been adapted for this possibility. It is possible that filing an “in between” report will cause correspondence to be generated by the system, creating more work for plan sponsors and practitioners. The bottom line is that the plan sponsor has minimum filing requirements that must be satisfied with regard to Form 5500. Anything beyond that is optional. New Dollar Threshold for Form 5500-EZ Filers Interestingly, the statute is clear that, beginning with 2007 plan years and thereafter, one-participant plans file Form 5500-EZ only for years in which the value of the plan’s assets (or combination of plans’ assets) exceed $250,000. In contrast, the rules for filing Form 5500-EZ prior to the PPA-related change required ongoing filing of Form 5500-EZ once the plan met the requirements associated with the prior $100,000 threshold. Practitioners and plan sponsors should take note that the change in the threshold does not relieve one-participant plans from filing Form 5500-EZ for years that the plan was required to file the report under the pre-PPA rules. A natural question arises: May a plan sponsor choose to continue filing Form 5500-EZ for years after 2006 even though the value of plan assets as of the last day of the plan year is less than $250,000? As all of us are keenly aware, there have been many instances of one-participant plans dealing with late filings because of the inadvertent failure to file Form 5500-EZ under the prior rules. Practitioners may find themselves reluctant to recommend an intermittent filing pattern, as permitted under the PPA rules. In addition, the agencies have been known to issue correspondence advising plan sponsors who filed Form 5500-EZ - for example, when plan assets did not exceed $100,000 - that no filing was required. This action sometimes caused tension between the plan sponsor and its advisor(s), who recommended the filing of Form 5500-EZ to keep the plan sponsor from potentially running afoul of the filing requirements by instilling the filing habit. Until the IRS is able to devote resources to devising a delinquent filer program for one-participant plans, there needs to be some compromise approach for filers that helps keep them out of trouble. It’s well known that many practitioners continue to recommend filing Schedule B with Form 5500-EZ reports for defined benefit plans; however, the IRS eliminated the need to file Schedule B for such plans beginning with the 2005 reporting year. Perhaps IRS will continue to tolerate filings that include more information than is required. One other question regarding the 2007 Form 5500-EZ recently posted on my Web site poses an interesting issue: A sponsor maintained a one-participant plan and filed the Form 5500-EZ for all plan years after the assets exceeded $100,000. The plan terminated in 2005, all assets were distributed and a final Form 5500-EZ was filed. In 2007, the sponsor has adopted a new one-participant retirement plan. Should we interpret the phrase in the instructions - “and you have one or more one-participant plans that separately or together” - to refer only to plans that are currently active or to any plans ever maintained by the plan sponsor? Presumably, the rule applies only to current plans of the sponsor, but it does point out an ambiguity in the text of the new instructions. [The text of the statute seems to speak to the asset values held in active plans.] IRS has indicated it may draft FAQs regarding the 2007 Form 5500-EZ changes that could answer these questions. Another update will be posted on this Web site if such FAQs are released. Special Rules for 2008 Short Plan Year Filers Because of these changes, filers that are subject to the abovementioned rules will be granted an automatic extension of time to file their complete 2008 Form 5500 until 90 days after the 2008 forms become available to use for filing. It is anticipated that the automatic extension will be needed only for affected plans that have a short plan year during 2008 and that the 2008 forms should be released in plenty of time for use by calendar year filers. PBGC Updates Premiums for 2008
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