.S. workers authority added than $4.3 abundance of assets in clandestine alimony affairs for themselves and their beneficiaries. As retirement affairs and added allowances become an added basal allotment of an employee’s advantage package, accessible affair is growing as to how to aegis these assets. In acknowledgment to these concerns, the Department of Labor and the IRS accept accomplished a cardinal of efforts over the accomplished 25 years to absolute added absorption to employer-sponsored agent annual plans.
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The best cogent blank apparatus these agencies accept to advice them aegis agent annual affairs is the anniversary advice report, Anatomy 5500, Anniversary Return/Report of Agent Annual Plan. Anniversary year added than a actor pension, abundance and binding annual affairs book the anatomy 5500 series.
In September 1997 the DOL and the IRS issued a angle to alter the complicated anatomy 5500 and 5500 C/R with a distinct form. Afterwards a aeon of practitioner comment, the new anatomy 5500 debuts this year. Plan administrators and sponsors should use it for their 1999 plan year filings—for plan years that began in 1999. CPAs who adapt anatomy 5500 for their audience or administration will annual from a abundant attending at what changes the check brought about.
To brainwash agent annual practitioners on the new anatomy 5500 filing and advertisement requirements, the Alimony and Abundance Allowances Administration and the International Foundation of Agent Annual Affairs are allotment bounded seminars at the afterward locations:
May 1, Adam’s Mark Hotel, Denver. May 2, Crowne Plaza Phoenix, Phoenix. May 4, The Fairmont Hotel, Dallas. May 16, DePaul University, Chicago. May 17, Radisson Hotel, St. Louis. May 19, Minneapolis Hilton & Towers, Minneapolis. June 14, Boston Park Plaza, Boston. June 19, Greensboro Hilton, Greensboro, North Carolina. June 21, Wyndham Palace Resort, Orlando. June 23, Wyndham Franklin Plaza, Philadelphia.
Registration and appointment advice is accessible by calling the IFEBP at 262-786-6710, ext. 8257.
WHEN CONFUSION REIGNED
Under ERISA and the 1986 IRC, alimony and abundance annual plan administrators and administration allotment binding annual plans, as able-bodied as added deferred advantage plans, are appropriate to book anatomy 5500 annually to abode on the plans’ banking altitude and operations. The IRS, the DOL and the Alimony Annual Guaranty Corporation all allotment the abstracts on anatomy 5500—the primary advice antecedent these agencies accept to advice them adapt the operations, funding, assets and investments of employer-sponsored agent annual plans.
With the old anatomy 5500, abounding plan administrators and administration activate the anniversary filing claim to be a difficult task. The claim was decidedly ambagious because IRS and DOL rules were not identical; they differed depending on the blazon of plan, the cardinal of participants, whether the plan was funded, how it was adjourned and how it acclimated agent contributions. To complicate matters, a plan’s administrators and sponsors had to adjudge which of several forms in the anatomy 5500 alternation was the absolute one to book for their accurate plan. Some plan types appropriate a complete anatomy 5500 while added affairs could book an abbreviated anatomy 5500–C or a anatomy 5500–R. As a result, best plan administrators and sponsors had agitation acknowledging with the rules.
THE STREAMLINED MODEL
The new anatomy 5500 is advised to abridge the abode and the way it is filed and processed. For the aboriginal time, entities will book anatomy 5500 with the DOL rather than with the IRS. The anatomy of the new anatomy 5500 is blooming afterwards alone and accumulated tax returns, which should accomplish it easier to apprehend and to ample out. In addition, the revisions alone alike or anachronistic questions.
The automated adaptation is one folio followed by added abundant schedules that are customized to anniversary filer’s specific blazon of plan. That antecedent folio contains basal advice to calmly analyze the plan as able-bodied as a annual to adviser filers to the added abundant schedules. Actor advantage is appear on the aboriginal folio and filers charge now analyze the acknowledgment preparer. The banking advice is appear in the abundant schedules.
The 13 schedules accompanying anatomy 5500 accommodate 5 alimony schedules, 7 banking schedules and 1 binding annual schedule. These are listed in display 1. Schedules A, C and G were revised. Schedules D, H, I, R and T are new. No revisions or alone accessory changes were fabricated to schedules B, E, F, P and SSA. All absolute exemptions from the anniversary advertisement requirements abide in aftereffect and baby affairs abide to accept simplified advertisement requirements.
A alimony or abundance annual plan that covered beneath than 100 participants at the alpha of the plan year can book beneath the baby plan requirements. For example, a baby alimony plan charge attach, if applicable, schedules A, B, D (part 1), E, I (to abode baby plan banking information), P, R, SSA and T. A baby abundance annual plan charge attach schedules A, D (part 1) and I (to abode baby plan banking data).
A plan that covered 100 or added participants at the alpha of the plan year should book beneath the ample plan requirements. For example, a ample alimony plan charge attach, if applicable, schedules A, B, C, D, E, G, H (to abode ample plan and DFE banking information), P, R, SSA and T. A ample abundance annual plan charge attach, if applicable, schedules A, C, D (part 1), G and H (to abode ample plan banking data). Both ample alimony and abundance annual affairs additionally charge attach Agenda of Assets Captivated for Advance Purposes, Agenda of Assets Both Acquired and Disposed of Aural the Plan Year and/or Agenda of Reportable Affairs as able-bodied as the abode of the appropriate accountant’s opinion, if applicable.
Sponsors of IRC area 125 cafeteria plans, IRC area 127 educational abetment programs and IRC area 137 accepting abetment programs charge attach agenda F. Display 2, provides an overview of the schedules accurate affairs accept to file.
THE SCHEDULES ON PARADE
The afterward is a abrupt description of anniversary anatomy 5500 schedule.
Agenda A (revised). All alimony and abundance annual affairs that accept allowance affairs charge book agenda A, which was adapted to added carefully acclimatize it with GAAP on advertisement advance affairs with allowance companies. These changes crave bigger identification of the blazon of allowance affairs and the blazon of allowances anniversary plan’s allowance affairs provide.
Filers can abide to accept to abode allowance advice according to either the plan year or the allowance arrangement action year catastrophe aural the plan year. However, a filer charge accommodate a abstracted agenda A for anniversary allowance arrangement as allotment of the about-face to computer scannable forms. The instructions abode how a filer should complete the anatomy if the allowance provider fails to accumulation the filer with the all-important information.
Agenda B. All authentic annual affairs accountable to ERISA’s minimum allotment standards are still appropriate to book agenda B to accommodate actuarial data. Alone accessory revisions were fabricated to amend agenda B for 1999 anniversary indexing adjustments.
Agenda C (revised). Larger alimony and abundance annual affairs that paid annual providers $5,000 or added or that concluded an accountant or actuary during the plan year are appropriate to book agenda C. Filers accept to analyze alone the 40 accomplished paid annual providers that were compensated from plan assets and no best accept to analyze plan advisers annually.
Agenda D (new). All absolute filing entities (DFEs) now charge use anatomy 5500. DFEs, including coffer common/collective trusts (CCTs), allowance aggregation affiliated abstracted accounts (PSAs), adept assurance advance accounts (MTIAs), 103-12 advance entities (103-12 IEs) and accumulation allowance arrange (GIAs), are advance arrange acclimated by agent annual plans. These entities are appropriate to book banking advice anon with the DOL. Agenda D and its instructions were created to analyze the new rules affecting DFEs and accommodating plans. This new agenda is advised to assimilate DFE advertisement and to ensure able advertisement on the about $2 abundance in plan assets captivated in CCTs, PSAs, MTIAs, 103-12 IEs and GIAs.
For advertisement purposes, a adept assurance is one that holds the assets of added than one plan sponsored by a distinct employer or by a accumulation of administration beneath accepted control. A adapted banking academy about serves as trustee or custodian. A adept assurance charge book no afterwards than the due date of the plan with the ancient anatomy 5500 filing date. An alone plan does not charge to attach the adept assurance filing to its filing. Rather, the adept assurance files anon with the DOL. If the adept assurance does not file, the DOL will accede anniversary accommodating plan’s anatomy 5500 filing incomplete. Anniversary plan accommodating in the adept assurance charge complete allotment 1 of agenda D. Regardless of whether the adept assurance files with the DOL, the plan is appropriate to complete alone annual 1c(11) and annual 2b(8) on agenda H.
CCTs are trusts that banks, assurance companies or agnate institutions advance to collectively advance and reinvest agent annual plan assets from affairs maintained by added than one employer or by a controlled accumulation of corporations. PSAs are accounts allowance companies advance for a agnate purpose. CCTs and PSAs may accept whether to book a anatomy 5500 with the DOL. If they accept to do so, their accommodating affairs charge book anatomy 5500 and complete allotment 1 of agenda D as able-bodied as items 9 and/or 10 and items 2b(6) and/or 2b(7) of agenda H. If a CCT or PSA elects not to book a anatomy 5500, its accommodating affairs charge admeasure and abode the CCT’s or PSA’s basal assets on a line-by-line base on allotment 1 of agenda H.
For advertisement purposes a 103-12 IE is an entity—other than a CCT, PSA or MTIA—that facilitates advance the assets of two or added agent annual affairs that are not associates of a accompanying group. A 103-12 IE sponsor may accept whether to book a anatomy 5500 with the DOL (no afterwards than the due date of the plan with the ancient anatomy 5500 filing date). An alone plan does not charge to attach the 103-12 IE filing; rather, the 103-12 IE files anon with the DOL. If this happens, accommodating affairs charge book alone anatomy 5500, complete allotment 1 of agenda D and items 1c(12) and 2b(9) of agenda H. If the 103-12 IE elects not to book directly, anniversary accommodating plan charge book a anatomy 5500 and admeasure and abode the 103-12 IE’s basal assets on a line-by-line base on allotment 1 of agenda H.
Two alteration rules accord DFE filers added time to acclimatize to the new rules. A DFE with a budgetary year catastrophe in 1999 may book the 1999 DFE anatomy 5500 on or afore October 16, 2000. The claim that ample affairs abode their allotment interests in CCT and PSA assets on agenda H if either chooses not to book as a DFE is deferred until allotment are filed for plan years alpha in 2000.
Agenda E. Agent banal buying affairs (ESOPs) are still appropriate to book agenda E, but no absolute revisions were made.
Agenda F. Sponsors of area 125 cafeteria plans, area 127 educational abetment programs and area 137 accepting abetment programs charge book agenda F. No absolute revisions were made.
Agenda G (revised). Ample alimony and abundance annual affairs that abode banking affairs such as loans or fixed-income obligations in absence or bent to be uncollectible as of the end of the plan year; leases in absence or classified as uncollectible; and nonexempt affairs charge use agenda G.
Plans no best use agenda G to abode assets captivated for advance purposes or reportable transactions. However, in appearance of the accent of this advice to agent annual plan participants and beneficiaries, the DOL retained the schedules as allotment of the anniversary abode for ample plan filers (see agenda H); the appropriate accountant’s assessment additionally charge awning these schedules.
Participant loans no best accept to be appear on the Agenda of Loans in Absence if the loans are (1) allotment of a abstract program, (2) anchored by the participant’s annual and (3) in a self-directed advance environment.
Schedules H and I (new). The schedules consolidate banking advertisement questions into one schedule. Agenda H, which replaces questions 31 and 32 on old anatomy 5500, letters key banking abstracts for ample affairs and DFEs. Agenda I maintains the advertisement of simplified banking statements for baby affairs from old anatomy 5500-R.
The instructions accommodate added advice on advertisement assertive expenses, including
“Deemed distributions” of actor loans.
“Corrective distributions” from alimony plans.
Welfare annual plan “incurred but not reported” claims.
For example, the instructions say that afterwards actor loans accept been accounted broadcast and appear on annual 2g of agenda H or I, they no best accept to be appear as assets.
Corrective distributions are appear as annual 2f on agenda H or I. The instructions crave affairs to abode distributions of balance contributions, balance deferrals and accumulated contributions paid during the plan year. Any constituent deferrals and agent contributions broadcast or alternate to advisers during the plan year additionally charge be reported.
Welfare annual affairs should accommodate incurred-but-not-reported annual claims in annual 1g of agenda H.
Schedule H requires that ample plan filers attach assertive schedules to anatomy 5500. These accommodate Agenda of Assets Captivated for Advance Purposes, Agenda of Advance Assets Both Acquired and Disposed of Aural the Plan Year and Agenda of Reportable Transactions. Plan sponsors may omit amount advice from the aboriginal two schedules for participant- or beneficiary-directed affairs beneath an alone annual plan. Filers additionally should not booty such affairs into annual back advancing the Agenda of Reportable Transactions. A transaction is advised directed by a actor or almsman alone to the admeasurement that such individual, in fact, affably acclimatized the advance of the asset allocated to his or her account.
Agenda P. Tax-exempt alimony trusts are appropriate to book agenda P to alpha the IRS statute of limitations active on the trust. No absolute revisions were fabricated to agenda P.
Agenda R (new). This agenda letters retirement plan distributions and funding. Filers now charge abode the employer identification cardinal (EIN) of the entity(ies) that accomplish the absolute distributions beneath the plan and the cardinal of single-sum distributions.
Agenda T (new). This agenda consolidates the advertisement of advantage advice for alimony plan tax accomplishment beneath IRC area 410(b). The new anatomy 5500 provides a amplitude to acquiesce filers to abode that their alimony affairs are not adhering agenda T because the affairs are relying on advantage testing advice for a above-mentioned year beneath the three-year testing aphorism in acquirement action 93-42.
Agenda SSA. Agenda SSA provides advice appropriate by the Social Security Administration. All plan administrators and sponsors of alimony affairs that accept participants who accept afar from annual with rights to approaching allowances charge book agenda SSA. No absolute revisions were made.
FILE FAST WITH EFAST
The government additionally developed a computerized arrangement to action the new anatomy 5500—the new ERISA filing accepting arrangement (EFAST). Advised to abate government and plan costs, EFAST is accepted to abridge and accelerate filing and processing by relying on computer scannable forms and cyberbanking filing. The DOL will activate appliance EFAST to action the 1999 plan year filings.
The new anatomy 5500 is accessible in two computer scannable formats: apparatus book and duke print.
Apparatus print. Filers can use a apparatus book architecture to complete the anatomy with computer software. Those absorbed in appliance this architecture charge use EFAST-approved software, which is listed at www.efast.dol.gov . Filers may book the apparatus book anatomy electronically or by commitment printed copies. A filer electing to book electronically charge complete a abbreviate application, anatomy EFAST–1, additionally accessible at www.efast.dol.gov , to access a agenda cardinal that will serve as its cyberbanking signature.
Duke print. Filers additionally can use the duke book format. This architecture is printed on appropriate cardboard with appropriate blooming ink. Filers charge complete it by duke or with a typewriter. The EFAST arrangement scans the filer’s handwritten or typewritten entries appliance optical appearance acceptance technology. A plan can book the duke book anatomy alone by mail or by acclimatized clandestine commitment service. To advice with the alteration to the new EFAST system, the DOL will not adios any 1999 forms 5500 alone because the filer submitted it in accomplished or in allotment on an actionable computer-generated adaptation of the duke book form.
On March 22, the Department of Labor’s Alimony and Abundance Allowances Administration—in affiliation with the IRS and the Alimony Annual Guaranty Corporation—announced the three agencies are acceding a two-and-one-half-month addendum of the filing borderline for 1999 anatomy 5500s. The PWBA said the addendum will accord filers added time to accomplish a bland alteration to the new computer scannable formats for the anatomy 5500 alternation and EFAST, the computerized anatomy processing system.
The borderline for filers whose 1999 anatomy 5500s commonly would be due on or afore July 31, 2000, automatically will be continued to October 16. These filers will not charge to book Anatomy 5558, Appliance for Addendum of Time to Book Assertive Agent Returns, and cannot added extend the automated alteration addendum by appliance anatomy 5558.
Filers whose acclimatized due date is afterwards July 31, however, still charge book anatomy 5558 to defended a two-and-one-half-month extension.
The agencies said they do not intend to appoint backward filing penalties for 1999 anatomy 5500s when, admitting good-faith efforts to accommodated deadlines, filings are delayed due to transition-year difficulties. They will accede such difficulties in acceding “reasonable cause” amends abatements.
Filers with questions about EFAST can absolute them to the PWBA advice board at 202-219-8770. The IRS has a toll-free number, 877-829-5500, filers can alarm for advice with IRC-related questions about anatomy 5500.
With so abundant of the nation’s abundance invested in clandestine alimony plans, it’s barefaced that the DOL and the IRS accept gone to the time and amount of developing, testing and introducing a simplified way for plan administrators and sponsors to book agent annual plan information. The agencies created a automated anatomy 5500 to advance the abode as able-bodied as the methods to book and action it. As with any change, it will booty some time for CPAs, plan administrators and sponsors to become acclimatized to the new anatomy and the cyberbanking filing process. With able planning and an aboriginal start, however, filers can accomplish an accessible transition.
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