Key Changes for Form 5500
Earlier this year, the U.S. Department of Labor (DOL), Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation announced changes to Form 5500, effective for plan years beginning on or after January 1, 2023. Here are the five key changes:
- Consolidated Reporting for DC Retirement Plans
- A new option for consolidated Form 5500 reporting for certain groups of defined contribution (DC) retirement plans, known as defined contribution group (DCG) reporting arrangements.
- DCGs will file a new Schedule DCG (Individual Plan Information) and adhere to large pension plan requirements. However, large plans in a DCG arrangement and small plans without audit waivers still require separate audits by an independent qualified public accountant (IQPA).
- Improved Reporting for MEPs and PEPs
- Changes to Form 5500 to enhance reporting by multiple-employer plans (MEPs) and pooled employer plans (PEPs).
- Introduction of Schedule MEP (Multiple-Employer Retirement Plan Information) to streamline reporting, with specific adjustments for PEPs.
- Revised Participant-Counting Methodology
- The new method counts only participants with account balances, rather than all eligible individuals, to determine the 100-participant threshold for small plan simplified reporting alternatives, including the IQPA annual audit waiver.
- This aims to reduce expenses for small plans and encourage more small employers to offer retirement savings plans.
- Detailed Reporting of Administrative Expenses
- Schedule H will now include detailed categories for administrative expenses, improving transparency on plan fees and expenses related to service providers.
- Categories include contract administration, recordkeeping, audit fees, investment advisory and management, trustee and custodial fees, actuarial services, legal fees, valuation/appraisal costs, and other expenses.
- Selected Tax Qualification Compliance Questions
- New IRS compliance questions are added to Schedule R (Retirement Plan Information) starting with the 2023 plan year, focusing on:some text
- Nondiscrimination testing under IRC sections 410(b) and 401(a)(4)
- ADP testing requirements for 401(k) plans
- Pre-approved plan letters, requiring the date of the favorable IRS Opinion Letter for the plan sponsor's pre-approved plan
- New IRS compliance questions are added to Schedule R (Retirement Plan Information) starting with the 2023 plan year, focusing on:some text
Plan sponsors are encouraged to review these changes to ensure compliance when completing and filing Form 5500. Fidelity is updating its processes, procedures, reporting, and systems to accommodate these changes.
Learn more about retirement plan noticing with Plan Notice
