On December 29th, 2021, the U.S. Department of Labor (DOL) released informational copies of 2021 Form 5500 Annual Return/Report. This release includes Form 5500-SF. In addition, the Internal Revenue Service (IRS) released the 2021 Form 5500-EZ and instructions. Specifically, Form 5500 satisfies the requirement of pension and welfare benefit plans to fill an annual return/report regarding their financial conditions, investments, and operations. Earlier on November 22nd, 2021, the IRS proposed changes to health insurance coverage reporting.
Overview of 2021 Form 5500
Altogether, the DOL, IRS, and Pension Benefit Guaranty Corporation developed the Form 5500 Series to allow employee benefit plans to satisfy annual reporting requirements under Title I and Title IV of ERISA and under the Internal Revenue Code. The Employee Retirement Income Security Act of 1974 (ERISA) sets minimum standards for most voluntarily established retirement and health plans in private industry. ERISA provides protection for individuals in these plans. The Form 5500 Series assures that employee benefit plans operate in accordance with certain prescribed standards. Additionally, it ensures that participants, beneficiaries, and regulators have access to sufficient information about their rights under employee benefit plans.
Important Modifications to 2021 Form 5500
Generally, the DOL has introduced several modifications to the 2021 Form 5500 Series, its schedules, and instructions. Forthwith, individuals may view those important modifications in the Changes to Note section of the 2021 instructions for each form. In summary, the Changes to Note for Form 5500 and Form 5500-SF are as follows:
- Defined Contribution Multiple-Employer Pension Plans – Multiple-employer defined contribution pension plans must report aggregate account balance information for each employer on the existing Form 5500/Form 5500-SF attachment for reporting participating employer information.
- Pooled Employer Plans – A pooled employer plan is a multiple-employer plan that files a single Form 5500. Pooled employer plans are required to check the multiple-employer plan box in Part A of the Form 5500. In addition, they must include the attachment for reporting participating employer information for multiple-employer plans.
- Administrative Penalties – An update reflects an increase in the maximum civil penalty amount assessable under ERISA section 502(c)(2).
- Schedule MB – Multiemployer defined benefit plans must report the amount of withdrawal liability payments included in line 3(b) employer contributions. Line 6c now includes new mortality tables to simplify reporting of older mortality tables. Finally, Line 7 may be used for net investment losses and other losses related to the coronavirus.
- Schedule SB – Line 6, target normal cost, is broken down into new lines 6a, 6b, and 6c. Line 6a is for reporting the present value of current plan year accruals decreased by any mandatory employee contributions. Line 6b requires reporting of expected plan-related expenses included in target normal cost. Lastly, Line 6c records the total target normal cost.
Additional Information
Indeed, a Federal Register Notice published on Dec 29th, 2021 included the proposals for the aforementioned examples and other changes to the 2021 Form 5500 Series. Filers may access the EFAST website for the official electronic versions of the Form 5500 Series for filing purposes.