DOL Closing In on Proposed 5500 Update, Official Says

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By Sean Forbes

Feb. 25 — The Department of Labor is aiming to streamline and clarify the new Form 5500 and its schedules to reduce the burden that plan sponsors and practitioners have to shoulder, a DOL official said at a conference of practitioners in Baltimore.

The proposed Form 5500 update is in the department’s clearance process, so “hopefully sooner rather than later,” it should be on its way to the Office of Management and Budget for review, Scott Albert, head of a division in the DOL’s Employee Benefits Security Administration, said Feb. 25.

Albert urged members of the audience to read the proposed changes once they're out and give the department feedback. “This isn’t just empty words. Let us know the good and bad,” said Albert, head of the Office of the Chief Accountant's Division of Reporting and Compliance.

“We’re considering areas where more detailed information will be useful—for example, the value there would be to bringing back the audit disclosure question in the pre-1999 Form 5500” for plan participants, the Employee Retirement Income Security Act agencies and the public, Albert told Bloomberg BNA after his conference session.

Prior to 1999, filers had to note in Box 26 on the Form 5500 whether they were concerned about anything in the audit or financial statements.

As of now, there is no way to easily capture that data in the form, he said.

Filers might note whether there was a concern about fraud or whether there was a going concern about the plan sponsor’s solvency, Albert said.

It would also be important to note whether there were any areas of concern because the attached auditor’s report may not be searchable, Albert said. Right now, the DOL receives many nonstandard attachments in which data can’t easily be captured, he said.

Albert spoke during a session of the 2016 Annual EP/EO Meeting, a joint meeting of several groups around the country that serve as liaisons between practitioners and the Internal Revenue Service on employee benefit plan issues. The Form 5500 is filed annually by employee benefit plans subject to ERISA.

Schedule C

Albert said one of the biggest areas of concern that he’s heard about over the years is regarding the disclosure requirements in Schedule C, for service providers. Albert said the DOL is looking “to align” ERISA requirements under Section 408(b)(2) that service providers disclose fees to plan fiduciaries with the requirements in that schedule. Some of the concepts such as eligible indirect compensation resulted from the attempt to avoid redundant reporting, particularly with mutual fund investments.

“We’re looking into whether that concept is still relevant or even helpful,” he said.

The new Schedule C should provide improved clarity about what is required and eliminate “double-work,” Albert said. “What goes on the Schedule C should be the information that plan sponsors would already have from their 408(b)(2) disclosures,” he said.

Another goal is to make the schedule a “one-size-fits-all.” The current schedule generates inconsistent data because some filers report actual fees and expenses, and others report formulas, while others don’t have to provide anything, he said. With the new schedule, the DOL would have a better picture of plan fees and expenses, he said.

Schedule H

The department is also working on revising the Schedule H, for financial disclosures, Albert said. The schedule has changed little since it was first rolled out, but financial products have, he said.

The goal is to make that schedule more granular, but without making it too specific, Albert said. General categories might include mutual funds and commodities.

Another aspect of the Schedule H is the unrealized gain/loss item, he said. “One thing that I would like to see is that unrealized gain/loss broken out a little more by asset category, but not overly analytical. But at least it could be not a bucket for everything, but a little more by the source of investment, or category of investment that is generating it,” he said.

The public also would gain from more granularity, because comparisons with market benchmarks would be easier to make, he said.

DFVC Program

Albert said that at times, filers can help themselves by remembering the basics—get the information right, particularly when filing through the DOL’s Delinquent Filer Voluntary Compliance program.

The DOL receives about 20,000 Form 5500s each year, and of those, about 1,000 will have what amount to proofreading errors, he said.

The DFVC program allows eligible plan administrators to lessen the assessment of civil penalties for failure to file Form 5500 annual reports. An eligible administrator is one who has not been notified of a failure to file by the DOL.

To participate in the program, administrators must submit to the EBSA the Form 5500 reports with accompanying schedules for each year they have not been filed and for which relief is requested.

“Please, make sure if your client or whoever is filing, and submitting through the DFVC program, particularly electronically, get the plan year right, the EIN right, the plan number right,” Albert said.

By Sean Forbes

To contact the reporter on this story: Sean Forbes in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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