After years of discussion, the DOL is requiring a number of significant changes affecting the Form 5500 for plan years beginning on or after January 1, 2009. A key change is that for the first time, the Form is required to be electronically filed. Refer to the electronic filing article here for information on that new requirement.
Another significant revision is reporting of Schedule C – Service Provider Information has been modified to require additional detail about both direct and indirect payments to plan service providers. The DOL is expecting these revisions to result in greater transparency and disclosure. Previously, only the top 40 compensated service providers totaling more than $5,000 in direct and indirect compensation were required to be reported on Schedule C. Under the new requirements, all amounts received by service providers totaling $5,000 or more in direct and indirect compensation must now be reported by the plan. Moreover, amounts received by fiduciaries and “enumerated service providers” totaling more than $1,000 in indirect fees (e.g., gifts, awards, trips, etc.) must also be reported on Schedule C. As a result of the more detailed reporting requirements for service provider compensation, the 2009 Schedule C will have a larger list of service codes to accurately disclose the relationship of the service provider to the plan. Finally, service providers who fail or refuse to provide the necessary information are required to be identified on the revised schedule.
Schedule R has also undergone a series of alterations on this version of the Form 5500. Many of these alterations were reported in 2008 as attachments to the schedule. Part V reports information on multiemployer defined benefit plans and information related to major contributing employers. Part VI includes asset allocation questions for large defined benefit plans. Furthermore, the minimum funding questions have been altered.
Finally, note that Schedule SSA – Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits will no longer be part of the Form 5500, but will be a separate form filed directly with the Internal Revenue Service (IRS). Currently this Form will be prepared as a paper filing, but the IRS hopes to provide electronic filing of the Form in 2011.
Indeed there are a number of very significant changes that will require your attention when working with your preparer to complete the Form 5500 for your plan. Please feel free to contact your Legacy representative with questions regarding this updated Form 5500.
By Bob Cann, CPA, Partner, Director of Compliance Services, rcann@legacycpas.com