The following is a statement from Craig P. Hoffman, General Counsel and Director of Regulatory Affairs of The American Society of Pension Professionals & Actuaries to the U.S. Department of Labor and the Internal Revenue Service requesting clarification and transitional relief for filling of Forms 5500 and 8955-SSA for multiple employer plans (MEPs) obligated to report under both the Employee Retirement Income Security Act and the Internal Revenue Code.

“Our members tell us that over the last 10 years multiple employer plans have become increasingly popular. Plan sponsors have been attracted to these arrangements for many reasons, not the least of which is the goal of lowering administrative costs that would otherwise be passed on to participants.

Employee benefit plans adopted by unrelated employers have been part of the law since the enactment of the Employee Retirement Income Security Act (ERISA). The Internal Revenue Code (IRC) contains specific rules that apply to these plans for purposes of the tax qualification requirements. No similar rules apply under Title I of ERISA. To be an employee benefit plan, however, the plan must be established or maintained by an employer, an employee organization, or both.

On May 25, 2012, DOL issued two advisory opinions that have been read to mean that many of today’s MEPs may not qualify as a single plan under Title I of ERISA. Instead, the employers jointly sponsoring the MEP would be treated as each sponsoring a separate plan and as a result, each would be obligated to file its own individual Form 5500.

Unfortunately, nothing in the Form 5500 instructions has ever indicated that a MEP, for purposes of filing a single Form 5500, must meet additional requirements beyond the fact that the sponsoring organizations were not part of the same controlled group. Additionally, it would appear that, for purposes of the reporting provisions of the IRC, MEPs should continue to file a single Form 5500 covering all the employers jointly sponsoring the plan. To date, no guidance has been issued by either the Department or the IRS advising plan sponsors on how to resolve the inconsistent rules that apply to the singular reporting form (i.e., Form 5500) mandated by both agencies as the vehicle for satisfying a plan sponsor’s statutory reporting obligation.

This inconsistency between Title I and the IRC puts plan sponsors in an impossible circumstance with no guidance from either the DOL or the IRS. As might be expected, the lack of guidance on how to deal with this inconsistency has caused a great deal of consternation. Many plan sponsors participating in MEPs have been relying on the guidance in Revenue Procedure 2001-21 and view it as governmental approval of these arrangements. The absence of any indication in the Form 5500 instructions of a “commonality” requirement has led many plan sponsors to the good faith belief that this approach had been sanctioned by both agencies. Even today, there still is no mention in the latest iteration of the Form 5500 instructions of a “commonality” requirement that must be satisfied in order for a MEP to file a single Form 5500 for the entire arrangement.

ASPPA recommends that the Department and IRS jointly provide guidance that clarifies and resolves the apparent inconsistent reporting obligations under Title I of ERISA and the IRC for plan sponsors participating in MEPs. ASPPA further recommends that the IRS affirm through formal guidance that a single Form 8955-SSA should be filed under IRC §6057 by the plan administrator for any plan subject to IRC §413(c).

Until clarified, transitional relief should be provided that would deem a plan sponsor participating in a MEP to have satisfied its reporting obligations under Title I of ERISA and the IRC if a Form 5500 has been filed for the MEP as a single plan. The relief should be made available for any plan year that begins on or before formal coordinated guidance is issued by the Department and IRS. Affected plan sponsors should also be given the option to file individually prior to this deadline.”

Instant Insights /

ASPPA looks for clarity in DOL/IRS fight over MEPs

More From HR Executive

Related Stories

Recommended For You