Category Archives: Form 5500

Today in ERISA History

July 23, 2007 – The IRS issues Announcement 2007-63, eliminating Schedule P from Form 5500 filings, effective for the 2005 and later plan years for Form 5500-EZ filers and for the 2006 and later plan years for all other filers. Schedule P was the Annual Return of Fiduciary of Employee Benefit Trust.

The reason for eliminating Schedule P was to aid the transition to electronic filing of Form 5500, because the information contained on Schedule P was also contained in other areas of Form 5500. Schedule P contained the name of the trustee or custodian, their address, the name of the trust, the trust’ EIN, the name of the plan (if different from the name of the trust), the plan sponsor’s EIN, a statement that the trust had furnished the participating employee benefit plan with the trust financial information required to be reported by the plan, and a penalty of perjury statement.

Announcement 2007-63 was primarily authored by Michael Rubin, IRS Employee Plans, Tax Exempt and Government Entities and William D. Gibbs and Dana A. Barry of the IRS Office of the Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities.

Today in ERISA History

July 20, 2009 – The Dept. of Labor issues Field Assistance Bulletin 2009-02, providing guidance on Form 5500 annual reporting requirements for 403(b) tax-sheltered annuity programs for contracts issued before Jan. 1, 2009.

In 2007, the IRS issued the Final 403(b) Regulations and the DOL published a revised Form 5500 and related regulations, eliminating limited reporting for 403(b) plans and requiring ERISA 403(b) plans with 100 or more participants to file audited financial statements with their Form 5500 filings. Recognizing that administrators could be unable to identify all participant contracts and accounts issued before Jan. 1, 2009, the DOL provided transitional relief for the 2009 plan year Form 5500 filings as long as certain conditions were met.

Former Madoff Employee Pleads Guilty to Falsifying Form 5500s

Craig Kugel, a former employee of Bernard L. Madoff Investment Securities LLC (BLMIS) and Primex Trading N.A. LLC (Primex), plead guilty yesterday (June 5, 2012) in the U.S. District Court for the Southern District of New York, Manhattan Division, on five counts involving conspiracy, making false statements in relation to documents required by ERISA, and subscribing to false U.S. individual income tax returns.

According to the FBI, Mr. Kugel’s responsibilities at BLMIS and Primex included budget forecasting for BLMIS’ Market Making and Proprietary Trading operations, overseeing the company’s health care plan, and reviewing and maintaining internal employee records and related documents, including submitting the Form 5500s for BLMIS’ employee benefits plan.

Even though he was aware that individuals on BLMIS’ payroll did not work for the firm but nevertheless received salaries and benefits, he created and maintained false BLMIS employee records on their behalf. Those employees were also included on the Form 5500s that Mr. Kugel submitted to the DOL for BLMIS’ employee benefits plan.

Of the 5 counts Mr. Kugel plead guilty to, 2 are related to ERISA:

    Count 1 involves Conspiracy to (1) obstruct or impede the lawful government functions of the Internal Revenue Service and to (2) falsify statements in relation to documents required by ERISA. It carries a maximum penalty of 5 years in prison; 3 years of supervised release; a fine of the greatest of $250,000 or twice the gross gain or loss; a mandatory $100 special assessment; restitution; and criminal forfeiture.
    Count 2 involves making false statements in relation to documents required by ERISA. It carries a maximum penalty of 5 years in prison; 3 years of supervised release; a fine of the greatest of $250,000 or twice the gross gain or loss; a mandatory $100 special assessment; and restitution.

Sentencing is scheduled for Dec. 13, 2012. Mr. Kugel is facing a statutory maximum sentence of 19 year in prison on all counts.

Today in ERISA History

April 5, 2011 – The Dept. of Labor announces Technical Revisions to Actuarial Information on Form 5500 Annual Return/Report for Pension Plans Electing Funding Alternatives Under Pension Relief Act of 2010. The Pension Relief Act, Pub. L. 111-192, 124 Stat. 1280 (2010) was signed into law by President Obama on June 25, 2010. It provided retroactive pension funding relief for single employer and multiemployer defined benefit pension plans, and that funding relief required certain technical revisions to Form 5500 Schedule MB and SB. Without these revisions, the DOL said that accurate and complete Schedules MB and SB could not be filed with respect to plans to which the funding relief applies because complying IRS Notice 2010-83 and Notice 2011-3 required certain information to be included.

Today in ERISA History

March 21, 2011 – The IRS releases Announcement 2011-21. It designates Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, as the form to be used to satisfy the reporting requirements of Code section 6057(a) for plan years beginning on or after January 1, 2009, and sets forth the due dates for filing the form for the 2009 plan year and subsequent plan years.

Today in ERISA History

March 13, 1997 – The DOL issues a Notice and Request for Comments on Annual Reporting Enforcement Policy, 62 FR 11929, requesting comments by May 12, 1997 on whether the DOL should adopt an annual reporting enforcement policy pursuant to which the DOL would not reject the annual report of a multiemployer welfare benefit plan solely because the accountant’s opinion accompanying the report is “qualified” or “adverse” due to a failure to account and report for post-retirement benefit obligations in accordance with financial statement disclosure requirements of the American Institute of Certified Public Accountants (AICPA) Statement of Position 92-6 (SOP 92-6). It was signed by Olena Berg, Assistant Secretary, Pension and Welfare Benefits Administration.

On Nov. 25, 1998, the DOL issued a Notice on Annual Reporting Enforcement Policy, 63 FR 65506, stating that it had decided not to adopt the policy proposed on March 13, 1997, and annual reports of multiemployer welfare benefit plans filed for plan years commencing on or after Jan. 1, 2000, will be subject to rejection if there is any material qualification in the accountant’s opinion accompanying the annual report due to a failure to comply with the requirements of SOP 92-6.

SOP 92-6 requires multiemployer plans to report actuarial liabilities on the plans’ financial statements based on detailed calculations that had not yet been performed, effective for plan years beginning after Dec. 15, 1995.

ERISA section 104(a)(4)(B), 29 U.S.C. 1024(a)(4)(B), allows the DOL to reject the annual Form 5500 filing if there is a material qualification in the accountant’s opinion. ERISA section 104(a)(5) says that if it is not corrected within 45 days, the DOL may invoke a number of options. ERISA section 502(c)(2), 29 C.F.R. 1132(c)(2) permits the DOL to assess civil penalties of up to $1,000 a day against plan fiduciaries for failing to file Form 5500, or filing a Form 5500 that is rejected. Those penalties may not be paid out of Trust assets and the DOL can hold plan trustees personally liable for the amount of the fines.

Free ERPA CE by the IRS on March 24, 2011

The IRS is hosting a free webinar on March 24, 2011 at 2pm ET on the proper completion and processing of Form 5330, along with ways to avoid common mistakes and how to make the processing by the IRS go smoother. The four speakers are Betty McClernan, Area Manager, EP Examinations Programs and Review; David Boyd, Manager, EP Mandatory Review; Carla Smith, Manager EP Compliance Unit; and Sherry Whitaker, Manager Submission Processing Programs. The webinar is worth 1 CE hour for ERPAs and other retirement plan professionals. To attend, you must pre-register through the IRS’ website before March 24th.

The DOL is also hosting two free webinars this week. It is not clear at this time whether the IRS has approved ERPA CE credit for attending these webinars.

On March 23, 2011 and March 24, 2011, at 1pm ET, the DOL is hosting a webinar on Getting It Right – Know Your Fiduciary Responsibilities Webcast Series – Part I and Part II. It is possible to attend one session without attending the other session. The March 23rd session contains information about the basic fiduciary responsibilities and on prohibited transactions and exemptions under ERISA. The March 24th session is about the reporting and disclosure provisions of ERISA and the DOL’s voluntary correction program.

Schedule SSA Morphs Into Form 8955-SSA

When the DOL switched to mandatory electronic filing for Form 5500, Schedule SSA went by the wayside. This was unfortunate because Schedule SSA provided a quick way to track vested terminated participants as they exit out of a plan, especially when backtracking through a plan’s history and census information as part of terminating the plan and filing Form 5310.

Today, the IRS announced the creation of Form 8955-SSA to replace the discontinued Form 5500 Schedule SSA. It is a new stand-alone form that is filed directly with the IRS. Form 8955-SSA is to be used for plan years beginning on or after January 1, 2009, which makes sense because Form 5500 Schedule SSA was discontinued for plan years that began on or after January 1, 2009, so there will not be a gap in information between the old Schedule SSA and the new Form 8955-SSA at the plan level.

The IRS notes in Announcement 2011-21 that Form 8955-SSA for the 2009 plan year is not yet available but will be made available soon. Form 8955-SSA for the 2010 plan year is still under development and should be available for filing later this year. By “later this year”, I’m hoping the IRS releases the 2010 Form 8955-SSA by the end of July, which is the initial filing deadline for the 2010 Form 5500s.

Form 5500 Information Coming Soon to a Website Near You

With 5500 season about to start, now is a good time to take another look at Section 504 of the Pension Protection Act. Section 504 is the requirement that, for plan years beginning after December 31, 2007, the plan sponsor will display information from Form 5500 on an Intranet website maintained by the plan sponsor for communicating with employees and not the public. Section 504 also requires the Secretary of the Treasury to accept electronic filing of Form 5500 in a format which accomodates display on the Internet, and to provide for displaying that information on an Internet website maintained by the Secretary within 90 days after the filing date.

Even though this requirement applies to plan years beginning after December 31, 2007, it is worth considering when completing Form 5500 for the 2007 plan year as information from the 2007 plan year will be displayed as the beginning balance for the 2008 plan year. Now is also the time to start planning for how to display the information electronically to employees on a website maintained by the plan sponsor, or maintained by the plan administrator on the plan sponsor’s behalf.

ON a related 5500 note, the Dept. of Labor has made older versions of Form 5500, along with the applicable schedules, available on their website here. Posted on the website are Form 5500s for years 1995 through 2007.

[tags]Pension Protection Act, ppa, 5500, electronic filing, DOL, ERISA[/tags]

More Form 5500 Information Available on the Internet

The New York Times published an interesting article on Feb. 3rd, 2008, about information derived from filed Form 5500s published on a couple of websites. Mary Williams Walsh, in Trying to Clear Fog From Pension Plans, discusses the requirement in the Pension Protection Act which classifies troubled pension plans with the label of “at risk”, “critical” or “endangered”, and websites which can provide that information to participants and beneficiaries for free.

For participants, beneficiaries, and people who are just plain curious, David J. Tananbaum at AtPrime Media has created the Pension Inspector, a database of information from filed Form 5500s which is searchable by company name, plan name, EIN, phone number or state. This database joins FreeErisa.com, a database of filed Form 5500s created and maintained by Judy Diamond Associates. Both databases are searchable for free after the user has registered with the website.

Before making a rollover contribution into a plan, imagine how valuable it is to an employee or particiapnt to have a database providing access to historical Form 5500 information about the plan, even if that information is limited to just a year or two of filings.

[tags]Pension Protection Act, ppa, Form 5500, pension inspector, FreeErisa.com, Judy Diamond, AtPrime Media, David Tananbaum, Mary Williams Walsh, New York Times, ERISA[/tags]