In our continuing series of articles and 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 this article, we summarize the responses in the DOL’s EFAST FAQs.

• All pension plans, welfare plans and direct filing entities (DFEs) subject to ERISA must file electronically for plan years commencing on or after January 1, 2009. The DOL expects to begin receiving electronically filed returns on January 1, 2010. Beginning January 1, 2010, an employer that files a delinquent 5500 or amends for a prior plan year, must file the 5500 electronically under EFAST2.
• An employer cannot file a Form 5500-EZ electronically. Instead the employer must use paper forms and file it directly with the IRS. However, a one-participant plan with no employer securities may file a Form 5500-SF electronically.
• An employer with a 2008 Form 5500 that is due after December 31, 2009 has three filing options:

File electronically under EFAST2.

File electronically using EFAST approved software until June 30, 2010.

File using 2008 paper forms until October 15, 2010.

• A plan with a short 2009 plan year whose filing deadline is before January 1, 2010 (e.g., terminates before June 1, 2009) has two options: (1) the plan may file a 5500 using 2008 paper forms by its normal deadline; or (2) the plan can take advantage of an automatic extension and file electronically. The special extension is 90 days following the date on which the DOL makes electronic filing available (targeted to be January 1, 2009). A plan with a short 2009 plan year which has a filing deadline after December 31, 2009 (e.g., a plan which terminates after May 31, 2009) is not eligible to use the 2008 paper forms nor is it eligible for the automatic extension. A plan with a short 2009 plan year that has a filing deadline after December 31, 2009 must file electronically and is not eligible for the automatic extension.
• IFILE is the DOL’s web-based 5500 preparation and submission application. An employer does not have to use IFILE.
• The DOL will post a list of approved third party software providers.
• The DOL expects most employers to continue using third party software to avoid technical problems which occur when an employer switches software. The DOL points out the following limitations with respect to IFILE: no batch filings; (2) no help features in preparing the 5500; (3) no integration with administration software; (4) no filing assistance; and (5) does not permit more than one individual to edit a filing (shoebox functionality).
• An individual (e.g., officer of an employer, preparer) may register for electronic credentials on January 1, 2010. The following types of electronic credentials are available: (1) filing author, (2) filing signer, (3) schedule author, (4) transmitter, and (5) third party software developer. A filing author prepares a 5500 under IFILE. A preparer using third party software does not need filing author credentials. A filing signer has an obligation to review the 5500 and the signature indicates a belief that the submission is true, correct and complete. The employer continues to be responsible for the timeliness of the filing.
• An individual may not use the PIN or ID from EFAST to file under EFAST2.
• Once an individual registers for credentials, he/she can edit his/her email address under the “Profile" link on the EFAST2 website.
• Schedule SSA is no longer part of the 5500 filing. Commencing with the 2009 plan year, Schedule SSA becomes Form SSA and an employer will file the form on paper directly with the IRS.
• An employer or a practitioner will be able to review a filing before it is transmitted to the DOL. However, under IFILE, only the filing author may modify the filing unless the preparer provides the employer with an XML file and the employer becomes a filing author.
• The DOL will permit a preparer to validate the filing before it is submitted.
• A preparer cannot submit a draft of the 5500 to the DOL.
• If a numeric field is zero, the preparer cannot leave it blank. Furthermore, if a field is to be left blank, the preparer should not insert a “0."
• The audit must be on the accountant’s letterhead, signed and saved in a PDF file. The preparer then attaches the file to the 5500.
• The DOL will receive a 5500 filing without an audit . However, the filing is incomplete and the DOL may subject the filing to correspondence, rejection and the assessment of civil penalties. The preparer which does not include the required audit must answer question 3 on the schedule H correctly.
• An employer no longer attaches the Form 5558 to a filing . However, the employer continues to use the form to obtain an extension to file.
• A preparer must submit attachments in PDF or text format. The audit and the Schedules SB or MB only may be submitted in PDF format.
• A preparer uses PDF software to prepare attachments in PDF format. For paper documents, the preparer will need to scan documents at 300x300 resolution and use true gray, grayscale or black and white depth to minimize the size of the PDF.
• If a preparer uses third party software to prepare a 5500 filing, it obtains the plan sponsor/plan administrator signature in one of the three following methods: (1) have a signing ceremony through a third party web based system; (2) export the 5500 to an XML file, upload the file to IFILE, and then have a signing ceremony; or (3) export the 5500 to an XML file and have the employer upload the file to IFILE .
• An individual can use the same credentials in subsequent years. If the same person is signing for the employer and the plan administrator, the person need only enter the credentials once. Comment: This is a change in the DOL’s position. In the past, they have always required two signatures irrespective of whether it was the same person.
• A third party administrator cannot obtain credentials for a business even if the business has no access to computers. The DOL recommends that the business use the public library.
• An actuary does not need electronic credentials to prepare a Schedule SB or MB on third party software. However, if he/she is using IFILE to prepare the schedule, the actuary would need filing author credentials (if preparing the 5500 and the schedules) or schedule author credentials if he/she is just preparing the schedule. An actuary must prepare a Schedule SB or MB electronically, print the form and then sign it (wet signature). After signing the form, the actuary would need to scan the form and attach it to the filing. Accordingly, the 5500 would include both an electronic version of the schedule and a scanned version.
• The receipt of an acknowledgement ID does not mean the DOL has accepted the filing. An employer must check the filing status to determine if the DOL has accepted the filing.
• An individual can check the status of a filing through the software he/she used to transmit the filing to the DOL. The DOL expects the status to be available 20 minutes following the filing. An individual also can call the help line to determine the status but the DOL will not describe errors over the phone.
• After an employer has submitted a 5500, the DOL will provide one of the following statuses: (1) unprocessable submission (multiple submissions), (2) processable submission (multiple submissions), (3) processing, (4) filing unprocessable (single submission), (5) filing stopped, (6) filing error, and (7) filing received. The DOL does not consider statuses 1-4 as filed with the DOL. However, the DOL considers statuses 5-7 as filed. Although the DOL considers (5) and (6) filed, the employer will need to take further action to correct the filing.
• When amending a filing, the employer must include all schedules and attachments in the amended filing even if there is no change to the schedules and attachments.
• For amending pre-2009 5500 filings, an employer uses current year forms and submits the amended filing electronically.
• The DOL will post all 5500s and 5500-SFs on the DOL website. If the employer amends a filing, the amended filing will replace the original filing on the DOL website. The DOL expects the public disclosure within one day of the filing.
• The DOL cannot accept a filing that exceeds 2GB. If the filing exceeds 2GB, a preparer can call the help line.
• A batch filing can include up to 100 filings as long as it does not exceed 2GB. If the filing exceeds 2GB, the preparer will need to break up the filing.
• A pop-up blocker may prevent a preparer from viewing the acknowledgment or other messages.
• The EFAST2 helpline is 1-866 GO EFAST.

EFAST2 Workshop. EFAST2 will no doubt be the most significant reporting change that has affected retirement and welfare plans during the past decade. Our Workshop will prepare you to make the transition to mandatory electronic filing. Attendees also will have access to two important tools: an EFAST2 checklist and a concise letter instructing employers how to obtain required credentials. We also have scheduled two other seminars to follow the EFAST2 Workshop – Plan Forms, Notices and Amendments and the ERISA Workshop. For more information on the seminars, click here.