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<em>Compliance Alert</em>

 

July 28, 2010

Countdown to the 2009 Form 5500 Filing Deadline for Calendar-Year Plans

The deadline for filing the 2009 Form 5500 for a calendar-year plan is fast approaching: midnight on Monday August 2, 2010. An automatic two and one-half month extension, to October 15, 2010, is available to all plans, provided a request is made by filing a Form 5558 before the normal due date.

This is the first year of mandatory electronic filing for the Form 5500 using a new Department of Labor (DOL) electronic filing system called "EFAST2."1 Paper filings will no longer be accepted.2 Moreover, there are related changes to the content of the 2009 Form 5500, to the filing process itself, and to the plan administrator's responsibilities.

In addition, beginning with the 2009 plan year, Section 403(b) plans that are subject to Title I of the Employee Retirement Income Security Act (ERISA) are subject to the same Form 5500 reporting requirements as any other ERISA-covered pension plans, including electronic filing and Schedule C indirect compensation reporting.3 For large §403(b) plans (generally those with 100 or more participants), this also includes filing audited financial statements.

Because many plan administrators may be considering requesting filing extensions, this Compliance Alert describes how extension requests will be handled under the new electronic filing rules. It also details the plan administrator's recordkeeping responsibilities under the new electronic rules and provides a list of filing-related action items for plan administrators whether they intend to file by the August 2 deadline or request an extension.

Of course, plan sponsors should look to their attorneys for authoritative advice on what the regulations require of them and whether to file for an extension.

The Form 5558 Filing Extension

There are a number of reasons why plan administrators might wish to request an extension this year even if they intend to file by the deadline. These reasons include protecting against the possibility of problems with the EFAST2 system as the filing date approaches; allowing time to correct an electronic filing that has been rejected; and allowing time to receive compensation information from service providers for Schedule C.

As in prior years, the Form can be filed by the plan sponsor, the plan administrator or a service provider, and does not need to be signed. The Form 5558 is still filed on paper and is mailed to the Internal Revenue Service (IRS).

There is, however, a new procedure with respect to the Form 5558 when the Form 5500 is actually submitted. In past years, the plan administrator was required to submit a copy of the Form 5558 with the Form 5500 when it was filed. Under the new system, the plan administrator does not submit the Form 5558. Instead, the plan administrator checks a box in Part I, line D of the Form 5550 to indicate it is filing under a Form 5558 extension. Should the plan administrator be required to substantiate the fact that it filed a timely Form 5558, it would do so with the copy of the Form 5558 as filed, as well as any acknowledgement received from the IRS, that it is has kept in its records of the filing.4

Plan-Administrator Recordkeeping Responsibilities

With all of the emphasis on the electronic transmission of the 2009 Form 5500, it is important that plan administrators not lose sight of the fact that they are responsible for keeping the official copy of the complete 2009 Form 5500 with all required schedules, attachments and signatures. The plan administrator should sign the official copy of the completed Form 5500 by hand, and keep it, along with the originals of any signed Schedule or attachment, in its records of the filing. A copy of this official copy is what must be provided on request to participants and beneficiaries under ERISA's disclosure rules. Also, as noted above, if a filing extension was requested, the administrator also should keep a copy of the Form 5558 as filed, and any IRS acknowledgement, in the file.

In addition, the plan administrator should keep in its files all of the correspondence from service providers with respect to Schedule C indirect compensation. It is particularly important to keep the responses of those service providers that send statements to the effect that they have made good faith efforts to collect and provide indirect compensation information, but are not able to do so for 2009. A plan administrator is required to list all plan service providers that do not provide the information the plan administrator needs to complete the Schedule in Schedule C, Part II. However, for 2009 only, the administrator does not have to list those providers who provide a written "good-faith effort" statement, and will want to retain the related statements to substantiate its treatment of such service providers. Plan administrators are, nonetheless, expected to provide any information they can with regard to the indirect compensation received by such providers.5

Finally, plan administrators also should gather and retain the information that would have been necessary to file a Schedule SSA for 2009 had they been required to do so. The Schedule SSA has been eliminated from the Form 5500. In its place, the IRS will be issuing Form 8955-SSA, and will be requiring plan administrators to file the same information that was previously reported on the Schedule SSA. Plan administrators will have to file the 2009 information eventually, but probably not until 2011. It is also expected that this new form will be filed on paper and mailed to the IRS.

Filing-Related Action Items

No matter when they intend to file, administrators of calendar-year plans also might wish to consider taking the following filing-related actions:

  • Register for EFAST2 signing credentials.  Although the paper version of the Form 5500 provides blanks for both the plan administrator and the plan sponsor to sign, DOL requires that the electronic Form 5500 be electronically signed by the plan administrator only. As a result, all plan administrators must register online with the DOL for filing credentials as "Filing Signer" of the Form 5500. If a Form 5500 is signed by a party other than the plan administrator, the filing will be rejected, unless the parties have elected to use a special option that permits a service provider to sign and submit the Form electronically.6 No matter when they plan to file, plan administrators should obtain their "Filing Signer" and any other necessary credentials on the DOL Web site as soon as possible.7 This process should take no more than 20 minutes, but could take longer as the filing deadline gets closer.
  • Verify DOL approval of Form 5500 preparer software.  Plan administrators that intend to use third-party preparers and/or third-party software to prepare and transmit their filings should contact those preparers and/or the software provider to ensure that the software to be used has been approved by DOL. These requirements are new to everyone and inadvertent software errors are inevitable. The list of approved software, including particular approved versions for some vendors, is available on the DOL Web site.8 (Sibson Consulting is already aware of filing issues that appear to be related to coding errors in approved software and to the inadvertent use of unapproved versions of third-party software.)
  • Check transmitted filings.  Once a 2009 Form 5500 filing has been transmitted to the DOL, it is processed immediately and the plan administrator generally will be notified within minutes whether the filing has been accepted or rejected. It is important to check the status of a filing for warnings or errors, even if the filing has been accepted, because a filing that has been accepted might be subject to further review and might still need to be revised and/or supplemented.9 A filing that is rejected is treated as not filed. Accepted filings are posted to the DOL Web site for public disclosure within a few days of filing.

•  •  •

Sibson Consulting does not practice law, and cannot provide legal advice. As with all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for authoritative advice on how to proceed with respect to the Form 5500 for the 2009 plan year. Plan auditors, administrators and other professional advisors who typically handle Form 5500 filings for the plan should also be of assistance on this.

1
An earlier, voluntary, DOL electronic filing system named "EFAST" can no longer be used. (Click on the following text to return to the Compliance Alert.)
2
There are two exceptions to the "all-electronic" rule: Paper filings printed from the old EFAST system will continue to be accepted for various 2008 plan year returns through October 15, 2010. In addition, "one participant" plans required to file Form 5500s must now use the paper Form 5500-EZ, obtained from and filed with the Internal Revenue Service (IRS), not the DOL. (Click on the following text to return to the Compliance Alert.)
3
For additional information relating to 2009 Form 5500 filing for §403(b) plans, see Sibson's July 29, 2010 Compliance Alert, "5500 Reporting Relief for Section 403(b) Plans" and/or http://www.dol.gov/ebsa/pdf/fab2009-2.pdf. (Click on the following text to return to the Compliance Alert.)
4
See FAQ-26 in "EFAST2 All-Electronic Filing System" ("EFAST2 FAQs"). (Click on the following text to return to the Compliance Alert.)
5
See FAQ-40 in "FAQs About the 2009 Form 5500 Schedule C" (2008) and FAQ-10 in "Supplemental FAQs About The 2009 Schedule C" (2009). (Click on the following text to return to the Compliance Alert.)
6
This option is described in more detail in EFAST2 FAQs, FAQ-33a. It is important to note that this option has the result of making a copy of the plan administrator's handwritten signature available for public access on the DOL's Web page as part of the Form 5500. (Click on the following text to return to the Compliance Alert.)
7
To register, go to http://www.efast.dol.gov. For FAQs related to EFAST2 credentials, see http://www.dol.gov/ebsa/faqs/faq-EFAST2-Credentials.html (Click on the following text to return to the Compliance Alert.)
8
This information is available at http://www.efast.dol.gov/software/software.html. (Click on the following text to return to the Compliance Alert.)
9
For a list of possible filing status messages, see EFAST2 FAQs, FAQ-38. (Click on the following text to return to the Compliance Alert.)

Compliance Alert, Sibson Consulting's periodic electronic newsletter summarizing important developments affecting benefit plan compliance, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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