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Form 5500 Filing Tips from the IRS
The Department of Labor (DOL), the Pension Benefit
Guaranty Corporation (PBGC) and the Internal Revenue Service (IRS)
have compiled the following practical, common sense tips for some
of the most frequently occurring Form 5500 filing problems.
Hopefully these tips will reduce the number of basic filing errors
encountered when processing the
Form 5500
and
Form
5500-EZ returns, and also help you avoid getting EFAST
correspondence regarding these basic mistakes. You can get more
information in the DOL’s
Trouble Shooter's Guide to Filing the ERISA Annual Report
(Form 5500). Also, filers with questions can call the
EFAST Help Line at 1-866-463-3278 (toll-free).
An Important Reminder for Fringe Benefit Plans
The Internal Revenue Service reminds employers that they no
longer have to file an annual Form 5500 and Schedule F for
so-called “pure fringe benefit plans.”
1. Employers who in the past filed Form 5500 and the
Schedule F (Fringe Benefit Plan Annual Information Return,
solely to meet the reporting requirements of Internal Revenue
Code section 6039D ("fringe benefit plans"), should file
neither Form 5500 nor Schedule F. In fact, the Schedule F has
been eliminated and the Form 5500 has been modified so fringe
benefit plan information cannot be reported.
2. Fringe benefit plans are often associated with ERISA
group health plans and other welfare benefit plans. The IRS
announcement regarding fringe benefit plans does not cover
these associated welfare plans. But, in many cases, a Form
5500 was not required for the welfare plan because it was
exempt from filing a Form 5500 report under Department of
Labor regulations. For example, fully insured or unfunded
welfare plans covering fewer than 100 participants at the
beginning of the plan year are eligible for a filing
exemption. Unless exempt, however, ERISA welfare plans must
still file in accordance with the Form 5500 instructions on
welfare plan filing requirements.
3. See
IRS News Release No. IR 2003-89 and the Form 5500
instructions for more information.
The Form 5500 Must Be Properly Signed and Dated
1. Failing to sign the form is the number one reason that
filers receive correspondence from the government regarding
their Form 5500 or Form 5500-EZ. Make sure that you have the
proper signatures and dates on the Form 5500, Form 5500-EZ,
and any attached schedules that require a signature (Schedules
B, P and SSA).
2. The type of plan or DFE filing the Form 5500 determines
who is required to sign the form. Please consult Section 4 of
the Instructions for Form 5500, under the heading "How to
File", for information on who is required to sign your
return/report.
3. Remember, if you choose to file electronically, the plan
must keep in its records an original copy of the Form 5500
filing with all required signatures.
The Form 5500 Must Have the Proper EIN and Plan Number (PN)
1. It is critical that the Employer Identification Number (EIN)
used to identify the “plan sponsor” be the same year to year
when completing line 2b of the Form 5500 or Form 5500-EZ.
Switching EINs without reporting the change on line 4 of the
Form 5500 or Form 5500-EZ will disrupt proper processing of
your form and cause correspondence with the filer. Also, the
same EIN must go on Line D of all the attached schedules
(except Schedule P which reports the EIN of the plan’s
employee benefit trust(s) or custodial account(s)).
2. A multiple-employer plan or plan of a controlled group
of corporations should select one of the participating
employers to list as the plan sponsor and use that employer’s
EIN on line 2b. If the plan sponsor is a group of individuals
(e.g., a board of trustees of a collectively bargained plan)
get a single EIN for the group. In the case of a Form 5500
filed for a Direct Filing Entity (DFE), use the EIN assigned
to the CCT, PSA, MTIA, 103-12 IE or GIA.
3. The three-digit plan number (PN), in conjunction with
the EIN, is used as a unique 12-digit number to identify the
plan or DFE. Although EINs are obtained from the IRS, the
plan sponsor/employer or plan administrator assigns the PN.
Also, once a three-digit plan number and your EIN is used for
one plan or DFE it cannot be used for any other of your plans
or DFEs, even after the plan or DFE terminates.
4. Plan administrators, plan sponsor/employers and DFE
sponsors should assign PNs as follows. Plans providing
pension benefits (such as profit-sharing or money purchase
plans) should be assigned plan numbers starting with 001 and
consecutive numbers should be assigned to other pension plans
(e.g., 001, 002, 003, etc.). The sponsor of an MTIA, CCT, PSA
or 103-12 IE filing as a DFE should also start with number 001
and consecutive numbers should be assigned to other DFEs of
the sponsor. Welfare plans and group insurance arrangements (GIAs)
filing as DFEs should be assigned plan numbers starting with
501 and consecutive numbers should be assigned to other
welfare plans and GIAs (e.g., 501, 502, 503, etc.). Do not
use 888 or 999 as a PN.
5. Consult the
Form 5500
filing instructions for line 1b and 2b in Section 6,
“Line-by Line Instructions”, for additional information on
EINs and PNs. The instructions for Line 2b include
information on how to obtain EINs from the IRS.
Do Not File a Form 5500 as a "Final Return/Report"
If:
Do not file a Form 5500 as a “final return/report” if
the plan has assets, liabilities or participants at the end of
the plan year.
1. Even if you consider a plan to have been terminated, a
Form 5500 and
all necessary schedules are required to be filed until all
assets have been distributed to the participants, legally
transferred to the control of another plan, or reverted to the
employer; and all liabilities for which benefits may be paid
under a welfare benefit plan have been satisfied. Except as
noted below for certain defined benefit pension plans, a plan
should not check the “final return/report” box on Line B(3) of
the Form 5500 and report having participants at year-end on
Line 7 of the Form 5500 or report having assets and
liabilities at the end of the year on the Schedule H or I.
2. If a trustee is appointed for a terminated
defined
benefit plan subject to ERISA section 4042, the last year for
which a return/report must be filed is the year in which the
trustee is appointed. For the final reporting year, check the
“final return/report” box on line B(3) of the Form 5500,
report the number of participants at year–end on line 7 on the
Form 5500, enter Code 1H on line 8a of the Form 5500, and
report the value of the assets and liabilities at the end of
the year on the Schedule H or I, as applicable.
3. A welfare plan that does not expect to file a Form 5500
for the next plan year because the plan has become eligible
for the Form 5500 filing exemption for small unfunded, insured
or combination unfunded and insured welfare plans should not
check Line B(3) on the Form 5500 but should enter Code 4R on
line 8b.
4. Please refer to the
Form 5500
filing instructions in section 4 under the heading "Final
Return/Report" and in section 6 regarding Line B(3) for more
information.
Use a Proper Business Code When Completing Line 2d of the
Form 5500
1. On Form 5500, Line 2d, be certain to enter a valid
business code that best describes the nature of the plan
sponsor's business.
2. The only business codes that are valid for use in
answering Line 2d are listed in the Form 5500 filing
instructions section marked “Codes for Principal Business
Activity”. If more than one employer and/or employee
organization is involved, the business code for the main
business activity of the employers and/or employee
organizations should be entered.
3. Business codes may change from year to year. Therefore,
the business code used for your last year’s filing may not be
a valid business code for the current year filing. You should
select the appropriate business code from the Form 5500 filing
instructions section marked “Codes for Principal Business
Activity” (e.g., if filing a 2002 Form 5500, the business code
you select should be one of the business codes from the 2002
instructions).
Use the Correct Plan Characteristics Codes on Line 8 of the
Form 5500
1. On Form 5500, Line 8, you must check box A and/or B to
indicate if the plan is providing pension benefits and/or
welfare benefits.
2. After indicating which benefits are being provided by
checking box A and/or B, you must enter the Plan
Characteristics Codes in the space provided beneath boxes A
and/or B. These codes describe the type of pension and/or
welfare benefits provided and other features of the plan. A
list and description of the Plan Characteristics Codes is in
Section 6 of the
Instructions for Form 5500.
3. An individual account pension plan like a money purchase
plan or profit-sharing plan (including a 401k arrangement)
should enter on Form 5500 line 8 the appropriate “Defined
Contribution Pension Features” and “Other Pension Benefit
Features” codes that are listed in the Form 5500
instructions. Individual account plans would not normally
enter codes for “Defined Benefit Pension Features,” such as
1A, 1B, or 1C.
Properly Identify the Funding and Benefit Arrangements on
Line 9 of the Form 5500
1. Indicate all the proper Funding and Benefit Arrangements
on Form 5500, Lines 9a and 9b. The “Funding Arrangement” is
the method used for the receipt, holding, investment, and
transmittal of plan assets prior to the time the plan actually
provides benefits. The “Benefit Arrangement” is the method by
which the plan provides benefits to participants.
2. Be careful to indicate all the applicable Funding and
Benefit Arrangements. The responses on Lines 9a and 9b are
cross-referenced against information on Schedules H, I, and/or
A, as appropriate. Be careful to attach the appropriate
financial or insurance schedule (H, I, A) that corresponds to
the Benefit and Funding Arrangements you indicate. For
instance, if "Trust" is indicated as an Arrangement, then a
Schedule H or I (as appropriate) should be submitted with the
Form 5500. Likewise if you indicate "insurance" as a Funding
and/or Benefit Arrangement, a Schedule A should be filed with
Form 5500 for any insurance contract with a contract or policy
year that ended with or within the plan year.
3. Please refer to the Form 5500 filing instructions,
section 6 "Line-by-Line Instructions", for a description of
the Funding and Benefit Arrangements.
Schedules Attached to Your Filing Must Match What You Report
on Line 10 of the Form 5500
1. The information you enter in the checklist on line 10 of
the Form 5500 must match schedules that are submitted with the
Form 5500. If you check a box indicating that a schedule is
attached, the schedule must be submitted with your Form 5500.
2. If you are filing Schedules A, P, or T, take special
care to enter the total number of each schedule you are filing
in the spaces provided on Line 10.
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