Nyc web june 2016

Form 5500 update
Presented by Debbie Packer & Cindy Herendeen
June 16, 2016
www.pwc.com

PwC | Form 5500 update
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
2

Small pension plan audit waiver summary
3
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.
The conditions for the waiver have
not been satisfied.
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 of IQPA audit
and report have been satisfied.
No
Does the administrator disclose the required information
in the SAR and on request?
Yes
No
No
No
No
Yes
Yes
Yes
Yes

File with or without an audit report attached?
A frequently asked question is whether Form 5500 should be filed by the due
date if the audit report is not yet completed or should the Form 5500 be filed
late through the Delinquent Filer Voluntary Compliance Program (DFVCP).
4
http://www.dol.gov/eb
sa/enforcement/OCA
Manual/cha8.html

Check the filing status after filing is submitted
• Important to check the status of your submission attempt and make sure they
are accepted
• DOL requires at least one electronic signature be valid
• Various ways to check the status:
- 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
5

When is my filing considered filed?
FAQ38
Not filed….
Unprocessable Submission*
Processable Submission++
Processing++
Filing Unprocessable*
** This submission must be corrected
and re-submitted.
++ This submission is still processing
6
Filed…..
Processing Stopped**
Filing Error**
Filing Received
** Filings with a status of ‘Filing
Error’ or ‘Processing Stopped’ must be
corrected through an amended filing

EFAST2
The IRS has all responsibility for the Form 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 reset or revoke Accounts
• 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)
7

EBSA website
Check EFAST2 Website for:
• FAQs
• User Guides
• Tutorials
• DFVCP Info
8

2015 Edit checks changes/additions
9
Test Severity Test agency Test explanation
B-677MB Error PBGC Fail when the code in Schedule MB, Line 4b indicates that the funded percentage
should be entered in Line 4a, but the funded percentage does not equal Line
1b(2) divided by Line 1c(3) or any of Lines 4a, 1b(2), or 1c(3) are blank.
B-678MB Error PBGC Explanation: Fail when Schedule MB, Line 4b contains "C" or "D", but either Line
4d was not checked "Yes" or "No", or Line 4d was checked "Yes" but reduction in
liability of zero or greater is not reported in Line 4e.
B-687SB Warning PBGC Line 1 equals the first day of the plan year and Schedule SB, Line 4 is checked
and Line 14 is not equal to (Line 2(b) minus (Line 13(a) plus Line 13(b))) divided
by Line 4(a) or at least one of Lines 14, 2(b), or 4(a) are blank.
B-711MB Error PBGC Fail when a multiemployer plan in critical or critical and declining status does not
report a plan year for emergence from critical status or a plan year in which
insolvency is expected or the plan year reported is less than the current plan year.
I-137MB Warning IRS/PBGC Fail when Schedule MB, Line 4b contains "E", "S", "C", or "D" and the Illustration
Supporting Actuarial Certification of Status (Attachment/SchMBActrlIllustration) or
Actuarial Certification (Attachment/SchMBActrlCertification) or Funding
Improvement Plan
(Attachment/SchRFundingImprovementPlan) or Rehabilitation Plan
(Attachment/SchRRehabPlan) is not attached.
P-230SF Stop DOL Fail when Form 5500-SF is provided and Line 5a (the number of participants at
the beginning of the plan year) exceeds 120.
P-390SF Error DOL Fail when Form 5500-SF, Line 7c(b) Net Assets End of Year Amount does not
equal the sum of Lines 7c(a), 8i(b), and 8j(a).

10
X-111 Error DOL Fail when the Filing Header, Administrator Signature date is less than the Plan
Year End date.
X-112 Error DOL Fail when the Filing Header, Sponsor Signature date is less than the Plan Year
End date unless the Administrator Signature date is equal to or greater than the
Plan Year End date.
X-125 Error DOL/IRS/
PBGC
Fail when the filing has been signed using the E-Signature option, but the Plan
Administrator's signed name and/or Plan Administrator's signed date has not been
provided on the Form 5500.
X-125SF Error DOL/IRS/
PBGC
Fail when the filing has been signed using the E-Signature option, but the Plan
Administrator's signed name and/or Plan Administrator's signed date has not been
provided on the Form 5500-SF.
X-126 Error DOL/IRS/
PBGC
Fail when both valid Administrator credentials and ESignature credentials have
been applied.
X-126SF Error DOL/IRS/
PBGC
Fail when both valid Administrator credentials and ESignature credentials have
been applied.
X-127 Warning DOL/IRS/
PBGC
Fail when the Form 5500, Plan Administrator manual signed date is earlier
than the Form 5500, Plan Year End date, or greater than the date the filing
was submitted.
X-127SF Warning DOL/IRS/
PBGC
Fail when the Form 5500-SF, Plan Administrator manual signed date is earlier
than the Form 5500-SF, Plan Year End date, or greater than the date the filing
was submitted.

11
Z-002 Warning DOL/IRS/
PBGC
Fail when the plan number on Line 1b of the Form 5500 or Form 5500-SF on
the current submission does not match the plan number from the previous
year's submission.
PBGC
Fail when the plan name on Line 1a of the Form 5500 or Form 5500-SF of
the current submission does not match the plan name from the previous
year's submission.
PBGC
Fail when the total participant BOY count on Line 5 of the Form 5500 or Line 5a of
the Form 5500-SF of the current submission does not match the total participant
EOY count on Line 6f of the Form 5500 or Line 5b of the Form 5500-SF from the
previous year's submission.
PBGC
Fail when the BOY total assets on Line 1f of the Schedule H, Line 1a of the
Schedule I or Line 7a of the Form 5500-SF of the current submission does not
match the EOY total assets on Line1f of the Schedule H, Line 1a of the Schedule I
or Line 7a of the Form 5500-SF from the previous year's submission.
PBGC
Fail when plan sponsor's address on Line 2a of the Form 5500 or Form 5500-SF
may be invalid.
PBGC
Fail when plan administrator's address on Line 3a of the Form 5500 or Form 5500-
SF may be invalid.

DFVCP 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
• Pilot program for non-ERISA plan filings – now permanent in Rev.
Proc. 2015-32
- IRS provides late filing relief for plans not covered by DFVCP
◦ Penalty payment required - $500 per return up to a maximum of $1500
◦ “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 (Form 14704 found on
IRS website)
12

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
• IRS regs issued in September 2014 make e-filing mandatory for 2014
and forward
- Paper still an option for filers with under 250 filings (e.g., W-2s),
otherwise file electronically through FIRE system
- Penalty relief available for delinquent filers
13

Delinquent Form 8955-SSA filings
• IRS Notice 2014-35 provides relief for delinquent Forms 8955-SSA
• Penalties waived if DOL DFVCP requirements met for related Form 5500
series filing
• Paper Form 8955-SSA filed with IRS
• Must file delinquent Form s8955-SSA no later than 30 days after
DFVCP filing
- Check the box in part 1, Line C and enter “DFVCP” in description
14

DOL Enforcement
The Office of the Chief Accountant (OCA) queries the ERISA database and
targets Form 5500 processing errors that have gone uncorrected as well as
filings improperly prepared.
1. Notice of Rejection – gives the plan administrator 45 days to make
any corrections.
2. Notice of Intent to Assess a Penalty (NOI) – the plan administrator has
35 days to submit to the DOL a statement of reasonable cause.
3. Notice of Penalty Assessment – (failure to respond to the NOI) Now the
matter becomes a debt due to the government. There is no appeal at this
point and cannot be over turned or reduced.
4. Notice of Determination – after the DOL reviews the statement of
reasonable cause the agency issues a notice of determination that contains
the final penalty amount.
i. The plan administrators may choose to pay the penalty or within 35 days
file an answer with the administrative law judge, appealing the penalty.
15

A Little Bit of History
On November 16, 2007 as part of the fee transparency initiative, EBSA
published final form revisions and a final regulation, generally effective for plan
years beginning on or after January 1, 2009, providing new requirements for
reporting service provider fees and other compensation on the Schedule C of
the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan.
• Expanded reporting by service providers of indirect compensation and
provided new definitions around indirect and eligible indirect compensation
• The “top 40” reporting was eliminated and you must report all service
providers who received $5,000 or more in direct or indirect compensation
• Expanded Service Codes
• Added a part to report service providers who fail or refuse to provide
information necessary to complete the Schedule C
16

Schedule C
Part 1, line 1 – Information on
Persons receiving only Eligible Indirect
Compensation
17

Part 1, line 1 – Alternative reporting option
• Allows filers to only report identifying information about the
service providers who provide certain written disclosures about
indirect compensation
• If meets conditions, then fees/codes not required to be reported (only report
who provided the disclosures)
• Make sure plan sponsor/administrator received all required disclosures for
‘eligible indirect compensation’
18

Required written disclosure
• Existence of compensation
• Services provided or purpose for payment of the indirect compensation
• Amount (or estimate) or description of a formula used to
determine compensation
• Identity of parties paying and receiving compensation
19

Examples of Eligible Indirect Compensation
• Fees or expense reimbursements charged to investment fund and reflected in
fund’s value or return on investment
• Finder’s fees
• Soft dollar revenue
• Float
• Brokerage commissions
• Other transaction-based fees for transactions or services involving the plan
that were not paid directly by the plan or sponsor
20

Persons receiving only Eligible
Indirect Compensation
Part I, Line I(a)
• Answer “yes” if service providers are excluded from the remainder of the
form because the receive only eligible indirect compensation
• If “yes” is checked on line 1(a), complete line 1(b)
Part I, Line I(b)
• Enter the name and EIN or address of person who provided you disclosures
on eligible indirect compensation
21

Persons receiving only Eligible
Indirect Compensation
22

$5,000 Reporting threshold
• $5,000 threshold remains unchanged
• Applies for total of direct and indirect compensation
• If administrator is only provided a formula for Schedule C compensation
reporting purposes, generally amount is presumed to meet the
$5,000 threshold
23

Exceptions
• Plan employee compensation <$25,000
• Employees of sponsor or service provider as long as:
- Sponsor/service provider is reported on Schedule C
- No other compensation from plan is paid to employee
• Person whose only compensation was reported on Schedule A
• Sponsor who was not reimbursed by Plan
24

Direct Compensation
• Payments made directly by the plan (or plan sponsor if reimbursed by the
plan) for services rendered to a plan or because of a person’s position with
a plan
25

Persons receiving Direct Compensation reporting
Part I, Line 2(a)
• Except for those persons and eligible indirect compensation for which
you answered “Yes” to line 1, complete as many entries as needed to list
each person receiving $5,000 or more in total direct and indirect
(including EIC) compensation.
Part I, Line 2(b)
• Enter service code describing service provided
Part 1, Line 2(c)
• Enter relationship with Plan or Plan sponsor, if any
Part 1, Line 2(d)
• Enter amount of direct compensation paid by Plan
26

Reporting Indirect Compensation
Part 1, Line 2
1. Capital One charged the plan $141,000 for recordkeeping services in 2015.
2. Massachusetts Mutual pays Capital One 10 basis points for other
administrative services. (These remained unchanged through the end of
the year.)
27

Part 1, Line 3
28

Indirect compensation may be reported by providing an amount, estimated
amount, or formula.
If provided a formula:
• Enter ‘0' in Element (g)
• Check 'Yes' to Element (h)
• Attach description of formula or other method
• Amount or formula to calculate indirect compensation may be based on
service provider’s fiscal year that ends within the Plan’s reporting year.
Direct compensation should be based on Plan’s year.
29

Special Rules for
Certain Compensation
30

Reporting gifts and other
non-monetary compensation
• Non-monetary compensation must be reported
• Limited de minimis exception
• Instructions caution filers that gifts and gratuities of any amount paid to or
received by plan fiduciaries may violate ERISA and give rise to civil liabilities
and criminal penalties
31

Limited exceptions from reporting for gifts and
other non-monetary compensation
• Tax deductible for federal income tax purposes by person providing
non-monetary compensation
• Nontaxable to recipient
• Valued at less than $50
• Aggregate value of gifts from one source is less than $100 in a calendar year
• Gifts with a value of less than $10 do not have to be counted toward the
$100 limit
• If the $100 aggregate value limit is exceeded, the value of all gifts will
be reportable
• Reported only if the provider receives in total $5,000 or more
32

Fully insured group health and similarly fully
insured benefits
If fees and expenses have been reported on Schedule A, they do not also have to
be reported on Schedule C
• Insurance investment contracts are not eligible for this exception
Compensation paid by insurer from its general assets to affiliates or third
parties to satisfy its contractual obligations to provide benefits is not required to
be reported on Schedule C
• Would not include compensation provided by insurer incidental to the sale
or renewal of a policy
33

Part II, Service Providers who fail or refuse to
provide information
Before reporting a service provider in Part II:
• Contact the service provider to request necessary information
• Warn them you will list them on Schedule C, Part II
34

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
35

More on Schedule H & Coordination with other
Schedules
• Codes used in Form 5500, Line 8a and 8b describe the benefits/features of
the plan
- FYI – if new employee rolling over account from prior employer, the plan
administrator can check the prior employer’s Form 5500 on EBSA see if
“not intended to be qualified” code “3C” is listed
• Schedule C – expense information
• Schedule D – existence of master trust, DFEs
• Schedule G – prohibited transactions, leases or loans in default
• Schedule SB and H for contributions & receivables
36

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
• Failure to make deferrals are not the same as delinquent contributions
37

Schedule H - Part I – Asset & Liability Statement
• Cash, modified cash or accrual basis may be used as long as there
is consistency
• Differences between Schedule H and audited financial statements must be
reconciled in footnotes
• Beginning balances must equal prior year ending balances
• Generally the company EIN is used to file (vs. trust EIN)
38

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
39

DFE Recap
40
Entity 5500 filing required? Audit required?
MTIA Yes No
PSA No No
CCT No No
103-12 IE Yes Yes
GIA Yes Yes

How are DFE investments reported on Schedule H
when DFEs don’t file?
41
Entity Effect of non/deficient filing on participating plans
MTIA Plan filings are deficient
PSA/CCT Plans must allocate investment among Schedule H, Part I categories
103-12 IE Same as PSA/CCT + Full scope audit is required
GIA Each plan must file as an individual plan

Emerging issues
• IRS Form 8822-B was revised in October 2014
- 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
- Quality of audits
• New Compliance Questions – not to be answered
• Penalty relief for Late EZ filers
42

Other developments
• Extension Due Dates – October 15, 2016 versus October 17, 2016 – what to
report on Form 5558?
• DOL issued proposed regulations in September 2014 that would require
electronic filing for top-hat and apprenticeship and training plan notices
- No changes in content
- Filers may immediately start using electronic systems to satisfy current
paper filing requirement
- The new electronic filing system for both types of notices is accessible via
the EBSA website
43

Questions?
This publication has been prepared for general guidance on matters of interest only, and does
not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty
(express or implied) is given as to the accuracy or completeness of the information contained
in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its
members, employees and agents do not accept or assume any liability, responsibility or duty of
care for any consequences of you or anyone else acting, or refraining to act, in reliance on the
information contained in this publication or for any decision based on it.
© 2016 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries
or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate
legal entity. Please see www.pwc.com/structure for further details.
Debbie.Packer@pwc.com
646-471-7238
Cynthia.G.Herendeen@pwc.com
646-471-5243

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