2. PwC
Agenda
Overview of the 2013 Form 5500
• 2013 changes to Form 5500
• Updates to delinquent filer program
• Filing extensions
• Form 5500-SF
• Highlights of processing system
Form 8955-SSA
Form 5500 schedules
Emerging issues
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3. PwC
2013 Form changes
Form M-1 Compliance
• Plans that file a Form M-1 (MEWA arrangements) must also file a Form 5500
• No exemption for small unfunded, fully insured or combination unfunded/fully
insured welfare plans
• DOL did not add a Form M-1 question to the 2013 Form 5500, so ALL welfare plans
must attach a statement on whether they must file a Form M-1 (see page 18 of the
Instructions)
- If subject to Form M-1 filing requirements, the plan must state if it’s compliance
with the requirements
• Failure to file the statement can cause the Form 5500 to be rejected
• Software providers have sample statements
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4. PwC
2013 Form changes
PBGC Coverage
• A new element 5c was added to Line 5 of Schedules H and I asking about PBGC
coverage for defined benefit plans
- Code 1G eliminated from line 8a of Form 5500 (used to be “plan covered under
PBGC insurance program”)
Schedule SB
• Form SB instructions have been updated to reflect the MAP-21 (“Moving Ahead for
Progress in the 21st Century Act) changes
• Instructions for line 11b have been clarified for plans where the valuation date for the
prior plan year was not the first day of the plan year
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5. PwC
DFVCP changes
• 2013 changes to DFVCP incorporated changes made to website since the program was
last updated in 2002
- Electronic filing of Form 5500s submitted under DFVCP for 2009 plan years and
after
- Online payment option
• IRS Changes
- Prior position set out in IRS Notice 2002-23
◦ No IRS penalties if Form 5500s filed with DOL under DFVCP
◦ See penalties under IRC sections 6652(d) ($1 per participant statement per day
not to exceed $5,000), 6652(e) ($25 per day per return up to $15,000) and 6692
($1,000 per actuarial report)
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6. PwC
DFVCP changes
• IRS created new procedure under IRS Notice 2014-32 since DOL will not accept Form
8955-SSAs
• Relief from IRS late filing penalties if
- Plan administrator submits under DFVCP
- Plan administrator files complete Form 8955-SSAs for that year by the later of:
◦ 30 calendar days after DFVCP filing, or
◦ December 1, 2014
• Applies to all DFVCP filings submitted under EFAST2 (2009 plan year)
• Must be submitted in paper format
• Plan sponsors not required to file information about terminated participants in a
delinquent report are not affected by this notice
• If not, a plan sponsor that had previously filed under DFVCP, must now file Form
8955–SSA with IRS by December 1, 2014
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7. PwC
DVFCP filings
• When filing, filer must check box on line C, Part 1 (Special Extension) of the Form
8955-SSA and enter “DFVCP” in the space provided on Line C
• Announcement of Pilot program for non-ERISA plan filings – Rev. Proc. 2014-32
- IRS announced late filing relief for plans not covered by DFVCP
◦ No penalty payment required
◦ “one participant” plans - covering only a 100% business owner (or owner and
spouse) or one or more partners in a partnership (or partners and their spouses),
and foreign plans
› Must file complete Form 5500 return, paper version and a transmittal
schedule for each return (found on IRS website)
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8. PwC
DVFCP filings
• Marked “Delinquent return submitted under Rev. Proc. 2014-32, Eligible for Penalty
Relief”
• Note there are different addresses for Form 5500 and Form 5500-EZ
• The pilot program runs from June 2, 2014 through June 2, 2015 and is only available if
the plan hasn’t received a penalty assessment
• IRS may adopt permanent relief once pilot project ends
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9. PwC
Due dates for Form 5500/Extensions
Due Dates
Plans and GIAs
• Last day of the 7th month after year end
DFEs other than GIAs
• 9 ½ months after the DFE year end
• Must be received by midnight in plan administrator’s time zone
Extensions
• Automatic 2 ½ months extension for plans when 5558 filed
• Signature not required
• Automatic extension to extended tax return deadline if plan year and plan sponsor’s
tax year are the same
• No longer have to attach extension request to Form 5500
• No extensions for DFEs
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10. PwC
Form 5558
Signature no longer required when using to extend Form 8955-SSA
Must file separate Form 5558 for each plan
• May use a single Form 5558 to extend the Form 5500 and Form 8955-SSA for the
same plan
• Lists attached to the form will no longer be processed
Note checkbox added for recently adopted plans that are requesting an extension for a
plan that will be filing a Form 5500 Series for the first time
• Must file Form 5558 with the IRS in Ogden, Utah
• Do not file with EFAST2 – EFAST does not forward to IRS
• Copies of extension request when used for Form 5500 Series or Form 8955-SSA will
not be returned to filers
• Keep a copy of extension request for your records
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11. PwC
When the Form 5558 is not enough
If the audited financials are not ready on October 15…
Penalties
Late filers – may be assessed up to $50 per day, with no limit, for the period they failed
to file, determined without regard to any extensions for filing
Non-filers – may be assessed a penalty of $300 per day, up to $30,000 per year, until a
complete annual report is filed
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12. PwC
DOL enforcement
15 Day Letters - Incomplete Filings
• Missing Information
• Missing Accountant’s Report
15 Day Letters - Filings with Errors
45 Day Letters
• 45 Days to electronically file if filing was incorrectly filed on paper
• 45 Days to electronically sign the form with a valid signature
Note these are only electronic notices, DOL no longer sends paper notices
Email address used to transmit Form 5500 is the one that is used by DOL to send notices
Make sure to monitor the email account!!
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13. PwC
Amended filings
In response to DOL correspondence, you must amend your filing if correcting any errors.
The Entire filing must be filed
If you file Form 5500/5500-SF and receive 'Filing Error,' or 'Processing Stopped' status,
you must check Box B on Form 5500/5500-SF to indicate “amended return” when
submitting revised forms
Do not file as an amended return if previous submission attempts were not successfully
received by EFAST2 due to transmission errors
June 18, 2014
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14. PwC
A word on the Form 5500-SF
• Form 5500-SF is a two page form
• Includes basic identifying information and financial information similar to Schedule I
• Pension and welfare plans with less than 100 participants (80 to 120 rule applies)
• Plan must be eligible for small plan audit waiver (not with enhanced bonding)
• No employer securities
• All assets must have readily determinable FMV
• Not available for multiemployer plans
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15. PwC
When are audited financial statements required ?
• Large pension plans (100 or more participants)
• 80-to-120 rule
• Small pension plans that do not meet the conditions for the audit waiver
• Large funded welfare plans (100 or more participants)
- VEBAs or taxable trusts
• 80-to-120 rule different for welfare plans because small fully insured or unfunded
welfare plans are not required to file
- Only small funded welfare plans required to file may take advantage of this rule
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16. PwC
Small pension plan audit waiver summary
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Is the plan a pension plan?
Is the Schedule I required as part of the plan’s
annual report?
Do at least 95% of the assets of the plan
constitute 'qualifying plan assets'?
Small pension plan
audit waiver
conditions do not
apply.
Is each person who handles
non-qualifying plan assets
properly bonded in an amount
that is at least equal to the
value of the non-qualifying
plan assets?
The conditions for the waiver
have not been satisfied.
The conditions for the waiver of IQPA
audit and report have been satisfied.
Does the administrator disclose the required
information in the SAR and on request?
No
Yes
No
No
No
No
Yes
Yes
Yes
Yes
17. PwC
EFAST2
The IRS has all responsibility for the 5500-EZ and Form 5558 and their processing.
Please call the IRS for questions regarding these Forms
EFAST2 Help Line
• Can’t answer questions regarding Third Party Software
• Can’t view your filing prior to submission to EFAST2
• Can’t see your password or challenge question
• Can answer questions about IFILE
• Can answer questions about Filing Status
• Staffed help line at 1-866-GO-EFAST
(between 8:00 AM and 8:00 PM Eastern Standard)
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19. PwC
Electronic signature required for submission — Or
filing will not be processed
• In 2012, DOL provided an optional web service to third-party software developers so
they could check the validity of electronic signatures prior to submission. DOL also
required at least one signature be on a submission otherwise it would be considered
unprocessable.
• Beginning 2013, DOL requires at least one electronic signature be valid — otherwise
the filing would be considered unprocessable. While the number of stopped filings
will likely be less, the number of unprocessable filings may increase.
• When you perform edit-tests, you might only get feedback on errors and warnings. You
might not know about ‘Unprocessable’ and ‘Stop’ errors until after you submit (or try
to submit). It’s important to check the status of your submission attempt and make
sure they are accepted.
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20. PwC
Check the filing status after filing is submitted
• Through the software you used to send your filing
• Through the EFAST2 Filing Search webpage
• Through EFAST2 Submissions webpage
- If you submitted through IFILE
- If you signed the filing
• Also, monitor your email later for correspondence from the EFAST2/DRC email
address
• Note that the signed auditor’s report with financial statements must be attached as a
pdf file
• The pdf file cannot be encrypted or password protected
- “Unprocessable error”
- Remember to pdf in portrait not landscape format
- Print heavy letterheads may result in rejection
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21. PwC
EFAST2 user responsibilities
Document retention
• Plan administrators and DFEs must retain a copy of the filing signed by the Filing
Signer and any acknowledgements received from DOL, along with all other documents
required by IRC and ERISA
• Signer must retain copy of signed Schedule SB or MB
• Must retain copy of Form 5558, if filed (not attached to filing)
June 18, 2014
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22. PwC
Form 8955-SSA
• Annual registration statement identifying terminated vested participants
• Report information on separated participants only on Page 2
- Do not use additional pages 1
- No attachments or other nonstandard format
• Instructions to lines 6a and 6b clarified – do not include any participants who were
previously reported (only report “A’s”)
• Reminder – file with IRS, not EFAST2
- May be filed on paper or electronically through FIRE System
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23. PwC
What is auditor’s responsibility regarding the
Form 5500?
• Notes to the financial statements must disclose differences, if any, between the
financial statements and the Schedule H
• Common differences
- Due to timing differences related to methods of accounting
◦ If Form 5500 prepared on cash basis but financial statements prepared on an
accrual basis
- Benefits payable
◦ Must be reported on Form 5500 but not on financial statements
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24. PwC
Don’t just look at the Schedule H
• Codes used in Form 5500, Line 8a and 8b describe the benefits/features of the plan
- New Rollover “safe harbor” procedures in Revenue Ruling 2014-9
◦ If new employee rolling over account from prior employer, the plan
administrator can check the prior employer’s Form 5500 on EBSA see if “non
intended to be qualified” code “3C” is listed
• Schedule C – expense information
• Schedule D – existence of master trust, DFEs
• Schedule G – prohibited transaction, leases or loans in default
• Schedule SB and H for contributions & receivable
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25. PwC
Expenses on Schedules H and C
Schedule H
• Reports expenses paid directly by plan/trust or where employer paid an expense and is
reimbursed by plan
• Includes taxes (UBIT or foreign taxes paid on investments)
• Includes PBGC premiums
• Usually prepared on accrual basis, consistent with financial statements
Schedule C
• Frequently prepared on cash basis
• Includes indirect fees
• Does not include taxes or PBGC premiums
• Note – DOL has sent letters to plan sponsors where no fees shown on Form 5500
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26. PwC
A word about delinquent participant
contributions
• All delinquent contributions, whether or not corrected, must be reported on Line 4a of
Schedule H until the year corrected
• Do not report on Line 4d (or Schedule G)
• Delinquent contributions that were corrected using VFCP and PTE 2002-51 are not
considered PTs, so are not disclosed on a supplemental schedule
• Others may be reported on a separate schedule, see the instructions for the required
format
• Filers may also include delinquent loan repayments
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27. PwC
Master trusts/DFEs
• Expenses reported at master trust level should not also be reported at plan level
• All expenses must be reported – either at trust level or at plan level
• Master trust footnote – review Schedule H for consistency
• Remember master trusts must always file Form 5500 DFEs
- Form 5500 filing is optional for 103-12 IE, CCTs and PSAs
- 103-12 IEs must attach audited financials
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28. PwC
Emerging issues
• IRS Form 8822-B was revised in August 2013
- New filing requirements that relate to business entities with an EIN, such as plan
sponsors
◦ Abandoned EINs, or incorrect addresses
- Report address change, change in responsible party
- Currently no penalty for failure to file
• DOL focus on plan’s internal control environment
- Lost participants
- Uncashed benefit payment checks
- ERISA spending accounts
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