EFAST Conference Gives Us Information About
2008 and 2009 Form 5500 Filings
The current EFAST system processed its 10 millionth filing on September 8, 2008, according to Mary E. Saville, EFAST Program Manager for Vangent, Inc. Her remarks were made at the EFAST Vendor Conference held in Las Vegas on September 18, 2008 which addressed 2008 Form 5500 filing software. A second vendor conference will be held in Orlando, FL on Tuesday, December 16, 2008 with software development for the new fully electronic EFAST2 filing system to be the focus of that program. Earlier this year, the DOL awarded the EFAST2 contract to Vangent, Inc.

While the focus of this program was the software development, testing and certification for the 2008 Form 5500 series filings, Marianne Gibbs of the DOL’s EFAST Program Management Office shared some details about EFAST2. A copy of the EFAST2 Request for Proposal (RFP) [Solicitation DOL069RP20266] is available online at http://www.fedbizopps.gov or through the Department of Labor’s Procurement Office at 202.693.4585.

2008 Forms
The 2008 Form 5500 package has not been released and, although the forms have been finalized, the instructions are still in review. It is expected that forms and instructions will be released in October.

Defined Benefit Plan Changes. The Pension Protection Act (PPA) of 2006 required revised reporting for defined benefit plans that results in the new Schedules SB (Single-Employer Defined Benefit Plan Actuarial Information) and MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information) along with new attachments to Schedule R.

Watch for these changes:

All other 2008 forms or schedules are expected to be identical to the 2007 versions.

EFAST2 for 2009 Plan Years
The official 2009 forms were released in November, 2007 and, as previously noted, the contract for developing the system to process those forms was awarded in March 2008. While the RFP for EFAST2 contained many specific details about the manner in which the system is expected to work, service providers have more questions than answers right now. The following summary identifies some matters that appear to be resolved.

EFAST and EFAST2 Operation Dates. The EFAST2 system is expected to be up and running as of January 1, 2010. The EFAST and EFAST2 systems will overlap for a brief period of time, in that EFAST will continue to accept paper filings for pre-2009 plan years until October 15, 2010. The EFAST system will stop accepting electronic filings as of June 30, 2010 and the system will no longer be used to process filings after that date.

Paper filings for pre-2009 plan years submitted between July 1, 2010 and October 15, 2010 will be manually entered into the EFAST2 system, but these filings will not be posted on the public disclosure website. As required by PPA, Form 5500 filings for all 2009 and later plan years will be automatically posted to a yet to be developed public disclosure website.
Beginning in 2010, all filings for prior years that are late or amended must be submitted for processing on the EFAST2 system. Filers will submit information using the 2009 (or later) year forms and schedules.

One-Participant Plan Filers will have the option to file electronically using Form 5500-SF or on paper using the Form 5500-EZ. Paper filers will submit their reports to IRS in Ogden, UT. It is unclear whether one-participant plans filing electronically will find their data posted on the public disclosure website. I am pushing this issue with DOL and IRS. If the “cost” of electronic filing by one-participant plans is public disclosure, it is likely that few, if any, plans will take advantage of the option – which is not the result IRS wants. EFAST2 is predicated on the notion that everything that comes into that system is automatically available for public disclosure.

Transmitter and E-Signature Credentials. EFAST2 requires that all transmitters as well as those who sign Form 5500 (on the face of the filing) apply for authentication credentials. Filers will be sent a postcard in December 2009 announcing the ability to apply for credentials using the internet registration (IREG) system beginning in January 2010.

According to the RFP, the same ID and PIN may be used for signing the Form 5500 as a plan administrator, employer/plan sponsor and/or DFE. Similarly, the same ID and PIN used for signing any portion of the Form 5500 may be used as credentials for transmitting individual filings. It should be noted that third parties such as actuaries, accountants and fiduciaries are not required to apply for electronic filing credentials as these will not be needed by the plan sponsor in order to complete an electronic filing.

[Comment: If you intend to use this method, I suggest you plan on using a secure file server to transmit these files. One, because the data may be considered sensitive and, two, because the files may be larger than some email systems will accept. I use the secure file exchange system offered by Benefit Insights, Inc. and have found it easy to use and my clients like it, too. For more information go to http://www.benefitinsights.com/secure/why_have.htm.]

The IREG software will require a separate email address for each applicant; therefore, credentials cannot be requested in batches or the ID and PIN information returned to a common email address. In other words, signers without internet access will have to establish and maintain an email address before authentication credentials may be requested. In its final regulations, DOL suggests that everyone has internet access at their local public library but, as a practical matter, it’s also possible that those without internet access have no local public library if they are in a remote locale.

Internet Filing (IFILE). IFILE will be an internet based option for filing Form 5500 series reports. Similar to the PBGC’s My PAA system, data may be manually entered or files may be uploaded or downloaded through IFILE; however, merging data files will not be possible. For example, suppose you prepare Form 5500 except for Schedule SB, and the actuary separately prepares Schedule SB. IFILE will not allow you to merge those files through IFILE. However, after discussion at the EFAST vendor conference last week, software developers may be able to find a solution that takes advantage of a partial file on IFILE to simplify the merging of data.

IFILE also allows service providers the ability to continue to place the burden to timely file the Form 5500 on the plan sponsor. Today, most service providers send out paper copies of the Form 5500 filing with instructions for filing. The service provider does not take responsibility (or liability) for timely filing once the report is in the plan sponsor’s hands. IFILE will allow you to continue that process with your clients - by delivering an electronic file to the plan sponsor with instructions to upload via IFILE. Using this procedure, the plan sponsor and plan administrator would use their IREG credentials (ID and PIN) to sign and upload the filing.

EFAST2 Does Not “Reject” Filings. One concern practitioners have repeatedly expressed is whether the new system will reject filings outright. It appears that - at least for 2009 plan year filings - the system will not reject filings but instead acknowledge receipt of a readable file along with any ERRORS or WARNINGS. An error may be, for example, that no audit report was attached. An error must be corrected. Warnings, on the other hand, may require attention. A complete list of issues that will generate an error message or result in a warning message will be made public later this year.

The new system anticipates that all edit tests will be part of the software package you use to generate filings, thereby minimizing the chance for transmitting a file that the EFAST2 system cannot read. So long as the EFAST2 system can read the file - whether or not there are errors or warnings - the Form 5500 series report will be considered filed.

It is not clear what grace period will be allowed for the filer to correct any deficiencies in the filing. We were advised that all notices concerning a filing will be sent directly to the transmitter. Plan sponsors using IFILE will receive notices directly, while a third party transmitter will receive the notice if engaged to file on behalf of a plan sponsor. In the latter case, the plan sponsor would not be aware of the notice.

Outreach. Learning about this new system is key to a smooth transition from EFAST to EFAST2. DOL has plans to begin presenting training sessions in the Spring of 2009 that will walk you through the e-signature rules, demonstrate IFILE, acquaint you with the public disclosure website, and explain other features of the new system.

Non-EFAST2 Forms
Form SSA, replacing the current Schedule SSA, will be processed directly with IRS for plan years beginning in 2009 and later. While there will be some modifications to the format, don’t expect any changes to page 2 (at least for the 2009 plan year). It is anticipated that the due date for filing Form SSA will be the same as the date for filing Form 5500.
IRS will be posting draft forms and proposed regulations in this regard soon. At that time we should know whether an electronic option for filing Form SSA has been worked out or whether the 2009 filing will be on paper only.

In Summary
I will continue to monitor news about the EFAST2 system as well as IRS decisions about the Form SSA and Form 5500-EZ. Updates to this website will be posted as appropriate.