Form 5500 Changes for 2015 – no S(o)UP for you—yet! Insights

Insights
from People and Organization
Form 5500 Changes for 2015 – no
S(o)UP for you—yet!
December 14, 2015
In brief
In October 2014, IRS announced it would start collecting additional compliance information on qualified
plans, and published proposed changes to the Form 5500 series on Form 5500-SUP (Annual Return of
Employee Benefit Plan Supplemental Information). The additional information was to be used by IRS to
monitor plan compliance and check plans for potential disqualification errors. The first draft of the Form
5500-SUP was published in the Federal Register in October 2014 (see GHRS Insight dated November 18,
2014 ‘Agencies Announce changes to 2014 and 2015 benefit plan filing procedures’). An updated draft
was posted to the IRS website in March 2015 and submitted to OMB for approval. Industry groups
decried the changes as burdensome and requested that they at least be made optional for the 2015 filing
season. Apparently heeding the criticism, the DOL has published advance copies of 2015 Form 5500 and
related schedules without a Form 5500-SUP. In its news release, the DOL noted that the IRS compliance
questions are found in Schedules H, I and R, and they are optional for the 2015 plan year. IRS has just
released an FAQ document answering some of the most common questions about the new questions on
the forms.
Separately, Congress has repealed a change in the law made last summer that would have provided an
additional month to the Form 5500 maximum automatic extension period, effective for the 2016 Form
5500 filing season. The change in the automatic extension period applied to many forms in addition to
the 5500; it has been repealed only with respect to the 5500.
In detail
Background
Long-time employee benefit
plan practitioners may
remember the Schedule T to the
Form 5000. The Schedule T
required the plan administrator
to disclose detailed information
about the Plan’s compliance
with the minimum coverage
requirements, but was dropped
in 2005 and replaced with a
question on the Schedule R.
In a renewed effort to obtain
plan compliance information,
the IRS announced it will start
collecting additional
information on qualified plans.
The additional information will
be used to monitor plan
compliance with the tax rules,
compile data for future
Employee Plans Compliance
Unit projects and check plans
for potential errors.
The IRS announced the
compliance questions would be
answered on the Form 5500 or
5500-SF or via submission of a
paper-only form called the Form
5500–SUP (‘Annual Return of
Employee Benefit Plan
Supplemental Information’).
The initial draft was issued in
October 2014, and further
modified by IRS in March, 2015.
The changes were originally
intended to be applied to the
2015 Form 5500 filing season,
www.pwc.com
Insights
with the Form 5500-SUP being used
by filers who file less than 250 returns
in a calendar year.
The additional compliance
information to be gathered included
such items as:
 Trustee name and phone number
 Whether the plan is a 401(k) plan
 Whether the plan is a safe-harbor
plan or uses the ADP/ACP test
 If the ADP/ACP test is used,
whether the current year testing
method is used
 Whether coverage testing is
satisfied by the ratio percentage
test or average benefits test
 Whether permissive aggregation
with other plans is used to satisfy
coverage and non-discrimination
testing
 Whether the plan has been timely
amended for all tax law changes
 Dates and other information
related to the most recent plan
restatement
 Opinion or Advisory Letter
information for adopters of preapproved master and prototype
documents or volume submitter
plans or determination letter
information for plans that are
individually designed
 Whether the plan is maintained in
a US territory
 If the trust had unrelated business
taxable income and the amount,
and
 Whether in-service distributions
were made during the plan year
and the amount.
The publication of the draft Form
5500-SUP upset many third party
2
administrators, given the extra work it
would create, including the need to
communicate with plan sponsors
about compliance issues and to adapt
electronic systems. Many industry
groups expressed these concerns to
Treasury and requested that the
compliance reporting requirements at
least be made optional for 2015.
Form 5500, to provide a 3 ½ month
automatic extension. Congress has
just passed a new extension of the
transportation funding measure that
repeals this change in the automatic
extension period for employee benefit
plans filing Form 5500.
Relief Granted
Many third party administrators had
already initiated systems changes to
capture the compliance data
requested by IRS. While the answers
to these questions are optional for the
2015 filing year, plan sponsors should
anticipate receiving questions on
these issues from their service
providers. Plan sponsors should be
reviewing the new questions in
anticipation of trouble shooting
potential problems.
With a tip of the hat to Jerry Seinfeld,
we can report that the draft 2015
Form 5500s were published late last
week on the DOL website with no
Form 5500-SUP. The DOL news
release and the Form 5500
Instructions noted that new IRS
compliance questions have been
included in the Schedules H and I and
R, but that they are optional for the
2015 plan year. The compliance
questions are identical to those in the
draft Form 5500-SUP, with an
additional question about minimum
required distributions to 5% owners
on the Form 5500-SF.
FAQs released
IRS has released a new FAQ
document focusing on the new
questions on the 2015 Form 5500series forms. Although the new
questions are optional, IRS strongly
encourages filers to answer them. The
FAQs clarify how filers should
respond to these questions in various
specific situations. Filers should refer
to the FAQs as they are preparing the
forms.
The takeaway
If you have any questions about the
new questions in the 2015 Forms
5500, we would be happy to walk you
through them. Employers may also
consider taking affirmative steps to
document their plan's compliance by
engaging third parties to undertake
compliance reviews of both plan
documentation and plan operations.
Please contact a PwC professional if
you would like to discuss undertaking
a plan compliance review
In Other News
As many benefit plan practitioners
know, employee benefit plans are
required to file Form 5500 by the end
of the seventh month following the
end of the plan year, with a 2-1/2
month automatic extension available.
The transportation funding legislation
passed this summer by Congress
changed the filing deadlines for a
number of tax returns, including the
pwc
Insights
Let’s talk
For more information, please contact our author:
Debbie Packer, New York
(646) 471-7238
debbie. packer@pwc. com
Anne Waidmann, Washington, DC
(202) 414-1858
[email protected]
or your regional People and Organization professional:
US Practice Leader
Scott Olsen, New York
(646) 471-0651
[email protected]
Charlie Yovino, Atlanta
(678) 419-1330
[email protected]
Craig O'Donnell, Boston
(617) 530-5400
[email protected]
Jack Abraham, Chicago
(312) 298-2164
[email protected]
Terry Richardson, Dallas
(214) 999-2549
[email protected]
Todd Hoffman, Houston
(713) 356-8440
[email protected]
Carrie Duarte, Los Angeles
(213) 356-6396
[email protected]
Ed Donovan, New York Metro
(646) 471-8855
[email protected]
Bruce Clouser, Philadelphia
(267) 330-3194
[email protected]
Jim Dell, San Francisco
(415) 498-6090
[email protected]
Scott Pollak, San Jose
(408) 817-7446
[email protected]
Nik Shah, Washington Metro
(703) 918-1208
[email protected]
Stay current and connected. Our timely news insights, periodicals, thought leadership, and webcasts help you
anticipate and adapt in today's evolving business environment. Subscribe or manage your subscriptions at:
pwc.com/us/subscriptions
© 2015 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the United States member firm, 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.
SOLICITATION
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
PwC United States helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 157 countries
with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters
to you by visiting us at www.pwc.com/US.
3
pwc