Even though you still have plenty of time before filing 2014’s Form 5500, you’ll probably want to take a look at what this year’s form actually includes.
Reason: The DOL included a number of notable changes in the 2014 edition of Form 5500 (for which the agency provided informational copies, schedules and instructions).
The changes are at least in part influenced by the Government Accountability Office (GAO). Early on in 2014, that agency asked the DOL and IRS to change the way certain items are reported on Form 5500 by plan sponsors.
The Form 5500 filings are the feds’ main source for tracking info on retirement plan assets in the private sector.
So the GAO is hoping its recommended changes will result in greater clarity and consistency, specifically in areas such as plan investment info and how service provider fee info is disclosed.
‘Good faith estimate’ required
One of the most significant changes involves multiple employer plans. These plans are now required to include an attachment that identifies the individual workers enrolled in the plans as well as a “good faith estimate” of each employer’s contribution to the plan.
Another key change involves employers with fewer than 100 workers. These firms now must report the number of terminated participants with vested benefits during the course of the filing year when filing Form 5500-SFs.
Big changes for 403(b), pensions
Perhaps the most significant Form 5500 change is one that affects employers with 403(b) plans. For these firms, “Active Participants” must now include any participants who are eligible to contribute to the plan — whether they choose to make contributions to the plan or not.
Many 403(b) plan sponsors had only reported employees who either contributed or received employer contributions as Active Participants on their Form 5500s previously.
That means some firms, when they do a proper count of Active Participants, may have a higher number of Active Participants than what they have actually been reporting on their Form 5500. And, in certain cases, the new number may push some employers into the large plan category, which automatically subjects them to an annual audit.
As for the pension plan impact, single employer sponsors of defined benefit (DB) pension plans will now have to break down their funding target — i.e., the value of all accrued pension benefits for the plan.
The purpose of this breakdown: So that assets can be valued separately for active participants, retired participants or those participants that have been terminated but still have vested benefits under the plan.