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TPA Value-Add: Updates to Form 5500

You may be familiar with the Form 5500. But did you know the form has seen some major changes over the past few years? These changes include:

• Updates to Schedule H: Schedule H provides the filing’s financial information. The new version of the schedule includes additional breakout categories for the administrative expenses listed on the schedule’s “Income and Expenses” section. These new categories include audit fees, actuarial expenses, trustee/custodial fees, legal fees, and valuation fees.

• Updates to Schedule R: Schedule R provides specific retirement plan information. The new version of the schedule includes additional compliance-focused questions that are of particular utility to the IRS. These include questions related to nondiscrimination testing, ADP testing, and revisions to questions about defined benefit plan asset allocation.

• New Counting Methods for Small Plans: ERISA provides an audit exemption for plans covering fewer than 100 participants. Under new counting methods, plans may now rely on the number of participants with an account balance at the beginning of the plan year in determining whether an annual audit is required.

• New Schedule MEP: The filing packet now includes a Schedule MEP, to be used for information regarding multiple employer plans—including information regarding the MEP’s participating employers.

• New Schedule DCG: The filing packet also now includes a Schedule DCG for plans participating in a “defined contribution group”—meaning, broadly, a group of defined contribution plans with the same administrator, the same named fiduciaries, the same trustee, the same plan year, and the same investment options.

Form 5500 filings may seem simple at first, but are accompanied by a number of technical requirements and updates. And the stakes are high—Form 5500 reporting failures carry potential civil penalties of up to $2,586/day from the DOL and $250/day (up to $150,000) from the IRS.

Your TPA partners are well situated to review or prepare these filings for your clients, to help insulate your client from these potential penalties. Now is a great time to reach out to a TPA as you plan for this year’s reporting deadlines.

Hannah Munn, Partner, Poyner Spruill
Hannah’s practice is focused in the areas of Employee Benefits and Executive Compensation. She works with business owners and HR executives to understand and manage employee benefits and executive compensation arrangements. She routinely represents clients before the Internal Revenue Service, Department of Labor, and Pension Benefit Guarantee Corporation and has extensive experience in virtually all aspects of employee benefits.