Government regulators, hoping for a clearer picture on the condition of retirement plans, have announced changes to the Form 5500 and its short-form cousin that include estimates of an employer's annual contributions to a plan.
Other changes required by the Employee Benefit Security Administration, IRS and Pension Benefit Guaranty Corp. will require sponsors to document the number of participants at the beginning and end of a plan year.
Advanced copies of the modified forms, and their instructions, are available to plan sponsors on the Department of Labor's website, although they are for informational purposes only at this point and cannot be used to file the annual reports.
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The Government Accountability Office earlier this year recommended that the departments of Labor and Treasury change the way certain items are reported on Form 5500 for greater clarity and consistency.
Among other points, the GAO said the form needs to more clearly classify plan investment information and how service provider fee information is disclosed.
The Form 5500 is the primary source the federal government uses to track information on retirement plan assets in the private sector.
Some of the changes announced appear to reflect the GAO's recommendations, at least in spirit.
For example, multiple employer plans are also now required to include an attachment that identifies the individual employers in the plans, and provide a "good faith estimate" of each employer's contribution to the plan.
Also, Form 5500-SF filers, businesses with fewer than 100 employees, must now report the number of terminated participants with vested benefits during the course of the filing year.
Single employer sponsors of defined benefit pension plans will now have to break down their funding target — the value of all accrued pension benefits — so that assets can be valued separately for active participants, retired participants, or those who have been terminated and still have vested benefits.
They'll also have to provide funding level estimates for the previous year based on the previous year's effective interest rate, and, now, also a calculation based on the previous year's actual investment return for the plan.
Multiemployer plans in critical status will be required to report when the plan is projected to emerge from critical status, as laid out in its rehabilitation plan, a requirement of the Pension Protection Act.
Also, sponsors in multiple employer plans that have the benefit of filing one collective Form 5500 have previously filed information on their health care benefits (the MEWA Form M-1) as an attachment. This year, questions about the plan will also be included within the Form 5500.
Also read:
Short Form 5500 helps hide bad plans
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
