The Department of Labor’s (DOL’s) Employee Benefits Security Administration (EBSA) has announced the release of the Form 5500 Annual Return/Report. The 2020 form, released December 2nd, 2020, was in conjunction with the IRS and the Pension Benefit Guaranty Corporation (PBGC). The release includes the Form 5500-SF and the IRS released Form 5500-EZ, which now also appears on the EBSA website. It is important to note that these advance copies are informational only. The December 3rd releases are not for employers to file their 2020 Form 5500 Series.
Background of the Form 5500 Series
Form 5500 allows employee benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act (ERISA). The Form 5500 Series also meets reporting requirements under the Internal Revenue Code.
The Form 5500 Series (Series) is an important compliance, research, and disclosure tool for the DOL. It also acts as a disclosure document for plan participants and beneficiaries. The Series is also used by other federal agencies and Congress to assess employee benefit, tax, and economic policies.
Under ERISA, the Series helps to assure that employee benefit plans operate in accordance with certain prescribed standards. Participants and beneficiaries are also required to have access to sufficient information to protect their rights under employee benefit plans.
Updates to the Form 5500 Series
New additions and modifications to the Form 5500 Series include the following:
- Electronic Filing of the Form 5500-EZ: The Form 5500 and Form 5500-SF instructions include revisions that reflect changes to proper Form usage. In summary, one-participant plans should no longer use Form 5500-SF. Foreign plans also should not use Form 5500-SF and must file Form 5500-EZ with the IRS. Also, effective for plan years after 2019, one-participant plans and foreign plans can file the Form 5500-EZ electronically using EFAST2.
- Administrative Penalties: The instructions now reflect an increase to $2,233 per day in the maximum civil penalty amount under the ERISA. The increased penalty is applicable for civil penalties assessed after January 15th, 2020, and occurred after November 2nd, 2015.
- Accountant’s Opinion: To conform to new auditing standards, the EBSA added revised instructions to document an accountant’s opinion. The instructions now permit filers to indicate if there have been limitations placed on the scope of any previous audits.
- Schedules H and I, Line 4l and Form 5500-SF, Line 10f: The revised instructions now increase the required minimum benefit plan distribution age from 70½ to 72. This update conforms to an amendment to the Internal Revenue Code.
Employer Takeaways
As mentioned earlier, these advance copies of the 2020 Form 5500 Series are for informational purposes only. Employers cannot use these specific documents to file a 2020 Form 5500 Series Annual Return/Report. All pension or welfare benefit plans must file an annual return/report electronically. Employers need to submit the Form 5500 Series and any required attachments through the all-electronic EFAST2 system for proper processing. This release follows the launch of an EBSA resource to verify compliance with the Mental Health Parity and Addiction Equity Act (MHPAEA).