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. Preparing, managing and filing the attachments and the plan audits presents one of the more significant changes in Form 5500 filing and it presents one of the more difficult challenges. The following FAQs address the requirements for including attachments and the plan audit with the Form 5500 filing.

Will a plan sponsor electronically file attachments and plan audits (attachments)?

Yes. If a Form 5500 filing (or schedule) requires attachments, the preparer must file the attachments electronically.

In what formats must the preparer provide the attachments?

Under EFAST2, the DOL only accepts two electronic formats: (1) portable document format (PDF), or (2) plain text files, sometimes referred as ASCII files or text files.

Under EFAST2, how many potential attachments are includible?

Potentially, there are 51 separate attachments to a Form 5500 filing. The attachments include the Schedule of Assets Held, Schedule of Reportable Transactions, various actuarial schedules attached to the Schedules SB, MB and R, and the Accountant’s Opinion.

Under EFAST2, what requirements apply to the accountant’s opinion?

Under EFAST2, the accountant’s opinion must be on the accounting firm’s letterhead with the firm’s name, address and phone number. The opinion must also include a “wet" signature of the accountant. A wet signature is an actual signature which the accountant creates by hand using a pen on the opinion. Accordingly, the accountant will scan the opinion into PDF format. The accountant may not use text files for the opinion.

May a plan sponsor file a Form 5500 without the accountant’s opinion?

Unless the plan is exempt from the accountant’s opinion requirement, the preparer may NOT file the Form 5500 without the accountant’s opinion. If a preparer attempts to file without the opinion, the DOL will not accept the filing. Note: in the past, if the opinion was not ready by the extended deadline for filing the Form 5500, preparers would file the Form 5500 without the opinion to avoid the late filing penalties and then later, when the accountant completed the opinion, amend the filing to include the opinion. Although the DOL never officially recognized this technique, it never objected to it. Generally, by the time the DOL scanned the filing, the opinion was included. Accordingly, the preparer needs to warn the accountant that this technique will not be available under EFAST2.

How will the DOL prevent a preparer from filing a Form 5500 without the accountant’s opinion?

EFAST2 will have a “node" in the electronic filing structure that must include the opinion. If the filing does not contain the opinion in the node, the system will not accept the filing. Note: under EFAST2, the DOL will be aware that a filing is late immediately following the deadline. Accordingly, the DOL (or IRS) can send out letters assessing penalties immediately.

Will the Schedule SB or MB require a “wet" signature on the part of the actuary?

Yes. Therefore, the actuary will need to prepare the schedule, print it, and include the wet signature. The actuary then will need to scan the schedule into PDF format (again, no text file format) to be attached to the filing. The actuary also will need to provide the schedule in electronic format to be included with the filing. Accordingly, the filing will include both an electronic and PDF version of the schedule. Note: the reason for the wet signature is that the Board of Actuaries determined that the schedule needed a wet signature.

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. The process of including attachments and the plan audit presents one of the more difficult challenges of EFAST2. A 5500 preparer will need a software program that facilitates the process of creating and managing the attachments. Relius Government Forms software has the ability to generate and manage the filing of all of the attachments. 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. Order Now.