Form 5500: What to File When, While Avoiding Red Flags


The Form 5500, which is the annual tax return for pension and welfare benefit plans, recently has received a lot of attention from Congress, the IRS and the Department of Labor.

An extension to file the Form 5500, if requested, is again due on Oct. 15. The extension time had been given an additional month under transportation legislation that passed in the summer, which had added a month to the previous 2 1/2-month automatic extension period, allowing calendar-year plans to file as late as Nov. 15. But on Dec. 4, Congress passed a highway funding bill that included a repeal of the one-month extension for the Form 5500 (See related story, Repeal of 5500 Filing Extension Signed Into Law).

According to Bloomberg BNA, Craig P. Hoffman, general counsel at the American Retirement Association, said Dec. 4 that the extension that was put into effect this summer wasn't a welcome one. Not only did benefit plans not want the extra time to file the Form 5500, they felt it "dragged the process on longer." With no pushback from the Department of Labor and the Internal Revenue Service, the ARA pressed for the repeal of the provision and got it included in the legislation with the help of Rep. Lynn Jenkins (R-Kan.).

The Form 5500 is only filed with DOL, which forwards it to IRS and PBGC. The bill had extended the deadline for the IRS, but not the DOL. Linda T. Fisher of Linda T. Fisher 5500 Consulting LLC, Buffalo Grove, Ill., told BNA Dec. 10 that "it is my understanding the added month extension referred to the Form 5500 but we weren't sure what would happen with Direct Filing Entities (DFEs), like master trusts, and the Form 8955-SSA due dates (whether these would also be extended the additional month). The instructions regarding the due date for DFEs states they are due within 9 1/2 months following the end of the plan year which brings you to October 15th for calendar plan years. Whether these would also be extended was unclear."

Fisher said the repeal of the additional month extension for Form 5500 filings was great news. "This would have conflicted with various end of the year reporting requirements in addition to delaying the resulting Summary Annual Report distribution due date into the next calendar year (for calendar plan years)," she said.

The IRS also issued Form 5500 guidance on how employee benefit plans should respond to new compliance questions on the Form 5500 series in the form of answers to frequently asked questions, saying that responding to them was optional for the 2015 plan year.

Fisher said she was happy to see that the new questions were optional. "As a benefit plan professional, we had so many questions regarding these new IRS questions. Though their recently issued Frequently Asked Questions (FAQs) help, more questions remain. We anticipate additional guidance in the 2016 instructions for these along with additional FAQs so third-party administrators can start working on responses for their clients' plans. We are also happy that the Preparer's Name, address and phone number section will continue to be optional for 2015 plan years.”

In addition, a tax analyst with the IRS's Office of Employee Plans said during a Dec. 8 agency webcast that there are several red flags that could lead the IRS to audit a plan (See related story, Form 5500 Discrepancies Could Bring the IRS Knocking). The red flags include

  • inconsistencies on the form,
  • fields left blank,
  • indications that there are a large number of "separated participants" who aren't fully vested in their company's retirement plan, and
  • classification of a large portion of assets identified as "other assets" on the form.

The DOL also released advance copies of the 2015 Form 5500, with instructions that highlight new electronic filing requirements as well as various modifications.

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