Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The IRS added new compliance questions to the 2015 IRS Form 5500/5500-SF, which is the annual report filed by retirement plans with the Department of Labor and the IRS. The Form 5500 instructions, however, specifically provide that plan sponsors should not complete these questions for the 2015 plan year filing. Last week, the IRS invited comments on several of the new questions. In its request for comments, the IRS has also proposed to modify some of the questions from their original form, or delete them entirely.
Specifically, the IRS asks for comments on the following proposed changes to the 2016 Form 5500:
- Inclusion of trust information, including name, EIN, and name and telephone number of trustee or custodian.
- Inclusion of preparer information, including name, address and telephone number.
- Information on how a 401(k) plan satisfies the nondiscrimination testing requirements, and if the Average Deferral Percentage test is used, whether testing is done using the current year or prior year testing method.
- Information on the method the plan uses to satisfy the minimum coverage requirements of Code Section 410(b), and whether the plan is permissibly aggregated with any other plans for coverage and nondiscrimination testing purposes.
- Disclosure of whether a defined benefit or money purchase pension plan made distributions to an employee who had attained age 62 and who had not separated from service. The original question asked if any in-service distributions were made during the plan year, and applied to all types of plans.
- For sponsors who have adopted a pre-approved master and prototype or volume submitter plan that received a favorable IRS opinion or advisory letter, inclusion of the date of such letter and the serial number.
- For sponsors who have an individually designed plan that received a favorable determination letter from the IRS, providing the date of the most recent favorable determination letter.
- Removal of the question asking whether the trust incurred unrelated business taxable income.
- Removal of the questions relating to whether the plan has been timely amended for all required law changes, and the date of the last plan amendment/restatement for required law changes.
- Removal of the question requesting disclosure of whether the plan is maintained in a U.S. territory.
The IRS requests that comments cover the following issues:
- whether the collection of information is necessary for the IRS to perform its functions, including whether the information shall have practical utility;
- the accuracy of the IRS’s estimate of the burden of the collection of information;
- ways to enhance the quality, utility and clarity of the information to be collected;
- ways to minimize the burden on respondents of the collection of information, including through the use of automated collection techniques or other forms of information technology; and
- estimates of capital or start-up costs and costs of operation, maintenance and purchase of services to provide information.
Although the IRS has made some changes to the compliance questions and requested comments on others, it is likely that the compliance questions will remain on the Form 5500 in substantially the same version as proposed. The questions are designed to enhance the IRS’s ability to monitor plans for compliance with the Code’s qualification requirements. Because plan sponsors will eventually be required to answer these new questions, plan sponsors should take the opportunity now, with assistance from their advisers or legal counsel, to review their plan design and administration to ensure that their plans are in compliance.
Comments are due May 31, 2016.