Feds propose big Form 5500 changes

Heads up: The feds’ proposed revisions to Form 5500 filing could put some extra work on smaller firms’ plates.  
The DOL, IRS and Pension Benefit Guaranty Corp. just proposed a number of changes to Form 5500 that would mainly impact the data being collected for 401(k) and defined-benefit plans.
The feds’ announcement comes on the heels of an IRS’ addition of “optional” compliance questions on Form 5500.
But the proposal also included a major change involving smaller employers and their group health plans.

Fewer than 100 enrollees

One of the revisions in the feds’ proposal would require all group health plans to file an annual Form 5500.
Currently, group health plans with fewer than 100 enrollees are exempt from filing an annual Form 5500.
While this new requirement would certainly add to small firms’ administrative tasks, it would come with certain benefits.
Many believe it would help to shore up the information gaps that currently exist between small and large health plans.
As Eric Ryles, the managing director of Judy Diamond Associates, puts it: “There is a huge gap in the kind of information we can get for group health plans, with only plans with 100 or more participants currently filing.”
Note: Because Form 5500 filings are open to the public, data can be accessed by federal regulators and policy-makers as well as private sector researchers, companies and stakeholders.

Increased transparency

In addition to the filing requirement for small group health plans, the revisions aim to:

  • update how service provider fees are reported on Schedule C of Form 5500
  • improve the transparency of benefit plan investments, and
  • enhance reporting on alternative investments, investments through collective investment vehicles and other “hard-to-value” assets.

The good news is employers should have plenty of time to prepare for the changes.
The feds are shooting to have most (but not all) of the changes implemented for 2019 plan year filings.
These proposed revisions were published in the Federal Register on July 21, 2016, and employers have 75 days from that date to comment on those changes.

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