In our continuing series of FAQs on EFAST2, we are addressing the issues and procedures with which the 5500 preparers and plan sponsors will need to familiarize themselves to make the transition to electronic filing. In addition to familiarizing themselves with the new electronic filing procedures, 5500 preparers will need to understand the changes to the Form 5500 and the schedules as well as the Form 5500-SF. The following FAQs describe the elimination of certain schedules, the modifications to the Form 5500 and schedules, and the requirements to be eligible for the new Form 5500-SF.
What schedules will no longer be a part of a Form 5500 filing under EFAST2?
Schedules E and SSA no longer will be part of a Form 5500 filing. The DOL will move several of the Schedule E questions to the Schedule R. A plan sponsor will file the Schedule SSA separately.
How will a plan sponsor file a Schedule SSA under EFAST2?
Since the Schedule SSA will no longer be part of the Form 5500 filing, it is not part of EFAST2. Instead, the preparer will complete a new “Form" SSA using paper copies (no bar codes) of the form. The preparer then will file the form directly with the IRS. The IRS intends to provide electronic filing for the Form SSA filing in 2011.
Will a plan sponsor be able to include attachments to the Form SSA to report additional participants beyond the four spaces provided in the schedule?
Currently, the IRS is indicating that it prefers not to receive not permit attachments but they will accept attachments and forward them on to the Social Security Administration The IRS also has indicated that it will provide places for more than four entries on the form.
Will there be any new forms under EFAST2?
Yes. The DOL will provide a Form 5500-SF (short form) under EFAST2. The new form is two pages long.
Which plans will qualify to file a Form 5500-SF?
A pension or welfare plan is eligible to file a Form 5500-SF if the plan: (1) covers fewer than 100 participants (the 80/120 rules applies); (2) is eligible for the audit waiver; (3) has no employer securities; and (4) has 100% of its assets invested in investments with a readily ascertainable market value.
What schedules will a preparer include with a Form 5500-SF?
The Form 5500-SF does not require any schedules other than Schedule SB for a defined benefit plan.
Under EFAST2, must a plan sponsor file a Form 5500-EZ electronically?
No. A preparer may not file a Form 5500-EZ electronically. The preparer must file it directly, on paper, with the IRS. However, the plan sponsor may elect to file a Form 5500-SF electronically in lieu of the Form 5500-EZ. A Form 5500-EZ filer need only comply with the “no employer securities" requirement to be eligible to file the Form 5500-SF. Note: A sole owner who has no employees should be aware that the Form 5500-SF will be publicly disclosed on the DOL website. Therefore, sole owners who are concerned with others being aware of what they have in their retirement account should take the public disclosure into consideration in deciding whether to file the Form 5500-SF or the Form 5500-EZ.
Under EFAST2, what modifications will be made to the Form 5500 or the schedules?
Some of the more important modifications are as follows:
- Form 5500
New options to designate the type of extension obtained and a box for DFVC filing
Modifications to participant count question
Removing the preparer information question
New feature codes for default investment and automatic enrollment
New multiple employer question
Schedule A
Question to report insurance companies which do not provide information
Schedule C
Reporting information on persons receiving only eligible indirect compensation
Reporting information on other service providers receiving direct and indirect compensation
Modification to service provider information
Increasing the dollar threshold for non-fiduciary employees of the plan
Question to report service providers which do not provide necessary information
Schedules H and I
Blackout period question
Compliance question regarding payment of benefits
Supporting schedules for Schedule H do not need to list participant directed accounts
Standard supplemental schedule for reporting late deposits of deferrals
Schedule R
ESOP questions
Multiemployer defined benefit plan questions
Additional information for single employer and multiemployer defined benefit plan
5500 Workshop/401(k) Workshop. In our upcoming 5500 workshop, not only will we address all of the important questions and issues in the 5500, 5500-EZ, and schedules, we also will explain how to use and prepare effectively for EFAST2. We also have scheduled our 401(k) Plan Workshop to follow the 5500 Workshop. The topics for the 401(k) Workshop include the Suspension of the Required Minimum Distribution;, PPA ’06 Technical Corrections; New Guidance of Permissive Disaggregation; Safe Harbor 401(k) Plan Design; Participants in Financial Difficulties: loan defaults, hardship distribution and QDROs; and Complex Testing of Ordinary Allocations; and Penalties and Additional Income Taxes. For more information on the seminars, click here.
The 5500 Filing Guide is a comprehensive guide to completing the 5500 (and schedules) effectively and efficiently. The recently updated book not only includes practical explanations of each line on all the forms and schedules, but it also provides hundreds of examples and FAQs. For information on how to order the book, click here.
Relius Government Forms. SunGard’s Relius Government Forms 5500 Web Client is a secure, interactive, online solution that can help you and your clients meet the challenges posed by EFAST2. For more information, see our Web site.
Question and Answer Pamphlet on EFAST2. To help 5500 preparers explain the changes made by EFAST2, SunGard has prepared a Q&A pamphlet to answer the employers’ questions. Find out more here.
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