United States

Form 5500 improvement and modernization proposal


The Employee Benefits Security Administration (EBSA), the Internal Revenue Service and the Pension Benefit Guaranty Corporation are seeking comments on proposed revisions to the annual information return/reports filed by private-sector employee benefit plans. EBSA also has published proposed changes to its annual reporting and disclosure regulations. The proposed revisions are intended to modernize and improve the Form 5500 Annual Return/Report and would be effective for plan years beginning on or after January 1, 2019. Many items that previously were attached to the Form 5500 now will be required to be embedded within the schedules and form itself to enhance data mining, and many new questions require additional disclosures. A few of the many proposed revisions are briefly summarized as follows:

  • A separate Schedule C now will be required for each service provider of all filers of Form 5500, regardless of size, except for small group welfare plans that are not insured. In addition, Schedule C would require disclosure of the dollar amount of indirect compensation, rather than a description of basis points.
  • IRS-specific Schedule E, for sponsors of ESOPs, is now part of Form 5500 and includes questions previously moved to Schedule R.
  • Among other revisions, the proposed changes to Schedule H include the following:
    • The asset breakouts on the balance sheet component of the Schedule H would require more detailed reporting on the types of assets held by a plan, including alternative investments, hard-to-value assets and investments through collective investment vehicles.
    • Disclosure of the name of the audit engagement partner and information about the firm’s peer review would be required.
    • The plan would be required to disclose whether the auditor’s communications with those charged with governance disclosed certain matters.
    • The plan would be required to break out its interest in each asset in a master trust for a number of required disclosure items.
  • New questions have been added throughout the form regarding matters such as:
    • The number and value of uncashed checks
    • Plan termination information
    • Trustee signature
  • The proposal would require attachment of the certified statement of investment information; the certification language also would be revised.
  • A new Schedule J focusing on the requirements of the Affordable Care Act will be required for all plans that provide health benefits. As a result, plans with health benefits that have fewer than 100 participants no longer will be able to file Form 5500-SF because they will be required to file Form 5500 with the new Schedule J. However, plans with fewer than 100 participants will continue to be exempt from the requirement to file Schedules H and G.
  • Additional questions regarding matching contributions have been added to Form 5500-SF and Schedule R.
  • Form 5500-SF no longer can be used if the plan holds alternative or hard-to-value assets; plans holding such assets will need to complete Schedule H in Form 5500.
  • The following additional disclosures, among others, would be required on Schedules SB and MB:
    • Schedule of Retired Participants and Beneficiaries Receiving Payment Data, including data by age bracket, average age and average annual benefit reported
    • Schedule of Terminated Vested participant Data, including data by age bracket, average age, average annual benefit, assumed form of payment and the assumed first age of payment
    • Average age and average credited service of active participants

The proposals are available for comment until October 4, 2016.