Tuesday, January 20, 2015

Department of Labor Announces Changes for Form 5500 for 2014

Although the filing date for Department of Labor Form 5500 – Annual Return/Report for Employee Benefit Plans – is still several months away, plan sponsors should take a few minutes to become familiar with the changes that have been made for the 2014 reporting year.

Plan Sponsors of 403(b) plans should note: “Active Participants” include participants who are eligible to contribute to the plan, whether or not they actually choose to make contributions. This can be especially tricky for 403(b) plans since employees become eligible to make salary deferrals upon date of hire and few, if any, employees are excluded from the right to make elective deferrals. Many 403(b) plan sponsors have reported Active Participants as only those employees actually contributing to the plan or receiving employer contributions. When properly counted, a sponsor may find that the number of active participants is actually much higher than what they have been reporting. In some cases, the correct number may now result in the plan being considered a large plan and therefore subject to an annual audit. Plan sponsors should carefully review that the number of active participants is being correctly reported. Reporting of active participants is not a new requirement for 2014, rather it is the reporting of the number of active participants at the beginning of the year that is a new requirement.

Informational copies of the forms, schedules, and instructions are available on the Department of Labor website.

All Filers
Part I, A.
For Multiple-Employer Plans, an attachment will be required that reports the name, EIN, and an estimate of each contributing employer’s percentage of total contributions for the plan year
Part II, Line 6a(1)
A new Line 6a(1) has been added requesting the number of active participants at the beginning of the plan year.  The number of active participants at the end of the plan year is now Line 6a(2).  (403(b) Plan Sponsors see Note above.)
Schedule H –
Financial Information
The instructions for Line 1c(13) include a definition for “Registered Investment Company.”
Form 5500 – SF
A new check box has been added indicate whether the plan is a foreign plan.
Defined Benefit Plans
Schedule SB –
Single-Employer Defined Benefit Plan Actuarial Information
Line 3 has been modified to report separately the funding target for each type of participant (active, retired, and terminated vested).
Line 11b is split into two parts: (1) providing the calculation based on the prior year’s effective interest rate, and (2) providing the calculation based on the prior year’s actual return.
Line 15 has been expanded to address situations in which the AFTAP was not certified for the plan year.
Schedule MB-
Multi-Employer Defined Benefit Plan & Certain Money Purchase Plan Information
Line 4f has been added to require plans in critical status to provide information about the plan year in which a plan is projected to emerge from critical status or the plan year in which insolvency is expected.
Health and Welfare Plans
Form M-1 Compliance Information (Report for Multiple-Employer Welfare Arrangements)
Information that was previously required to be filed as an attachment now appears as three new questions on Form 5500.

If you have any questions, or would like to speak with an advisor, please get in touch by calling (855) 882-9177 or via e-mail at sbs@hanys.org.