Employers and other sponsors, plan administrators, third party administrators, and other service providers of employee benefit plans will want to check out the relevant advance informational copies of the 2014 Form 5500 and 5500-SF and final copy of the 2014 Form M-1 annual returns released by the U.S. Departments of Employee Benefits Security Administration, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation December 15, 2015.

Subject to certain exceptions, federal law generally requires that the plan administrator of a pension as well as health and welfare benefit plan electronically file the appropriate annual return/report about the employee benefit plan’s financial conditions, investments and operations along with any required attachments satisfy annual reporting requirements under Title I and Title IV of the Employee Benefit Security Act (ERISA) and under the Internal Revenue Code (Code).  Late or non-filing a required Form 5500 can be an expensive mistake.  ERISA subjects the plan administrator of an employee benefit plan that fails to file required Form 5500s on time to penalties of up to $1,100 per day.  Meanwhile, violations of the Code’s Form 5500 requirements by late filing or non-filing of a Form 5500 also carries its own penalties.  In addition to DOL penalties, the IRS may impose a penalty of:

• $1 for each participant for whom the plan fails to file a Form 8955-SSA statement for each day the failure continues, up to $5,000 for any plan year
• $1 for each day for not filing a notification of change of status, up to $1,000
• $1,000 for each failure to file an actuarial report by the required deadline and
• $25 each day the Form 5500-series return is not filed, up to a maximum of $15,000.Copies of the current Form 5500 Forms and associated schedules are available here.
• A quick review of the advance copies of the 2014 Form 5500s that plan administrators will be required to file for 2014 plan years reveals various changes compared to the 2013 Form 5500s. “The Changes to Note” discussion in the Instructions to the 2014 instructions to the Forms highlights these changes, which include:
• In light of these penalties, plan administrators need to ensure that all required Form 5500s and other annual returns are appropriately completed and filed on a timely basis. To the extent that any previously required Form 5500s were not filed or were filed late, the plan administrator also will want to correct this deficiency promptly using the Voluntary Compliance Resolution Programs currently offered by the Internal Revenue Service and Department of Labor. See Labor Department Delinquent Filer Voluntary Compliance Program; IRS Notice 2014-35.

• The MEWA Form M-1 compliance information that was filed as an attachment for 2013 now appears as three new questions on the Form 5500.
• The Form 5500 and Form 5500-SF instructions for “Signature and Date” have been updated to caution filers to check the Filing Status. If the filing status is “Processing Stopped” or “Unprocessable,” the submission may not have had a valid electronic signature, and depending on the error, may be considered not to have been filed.
• Filers are now required to provide the total number of active participants at the beginning of the plan year and at the end of the plan year on both forms.
• Form 5500-SF filers now must provide the number of participants that terminated employment during the plan year with accrued benefits that were not fully vested.
• Multiple-Employer Plan Information. In accordance with the Cooperative and Small Employer Charity Pension Flexibility Act, the Form 5500 and Form 5500-SF now require multiple-employer pension plans and multiple-employer welfare plans to include an attachment that generally identifies each participating employer, and includes a good faith estimate of each employer’s percentage of the total contributions during the year.
• The instructions for line 1c(13) have been enhanced to set out what is an investment company registered under the Investment Company Act of 1940.
• New Line 4f requires plans in critical status to indicate the plan year in which a plan is projected to emerge from critical status or, if the rehabilitation plan is based on forestalling possible insolvency, the plan year in which insolvency is expected.
• Schedule SB, line 3 has been modified so that the funding target is reported separately for each type of participant (active, retired, or terminated vested). Schedule SB, Line 11b has been split into two parts: the calculation based on the prior year’s effective interest rate, and the calculation based on the prior year’s actual return. Modifications to Form 5500 and Form 5500-SF, and their schedules and instructions for plan year 2014 are described under “Changes to Note” in the 2014 instructions. Examples of these changes include:
• DOL Form M-1 Compliance Information. The MEWA Form M-1 compliance information that was filed as an attachment for 2013 now appears as three new questions on the Form 5500.
• Signature and Date. The Form 5500 and Form 5500-SF instructions for “Signature and Date” have been updated to caution filers to check the Filing Status. If the filing status is “Processing Stopped” or “Unprocessable,” the submission may not have had a valid electronic signature, and depending on the error, may be considered not to have been filed.
• Active Participant Information. Filers are now required to provide the total number of active participants at the beginning of the plan year and at the end of the plan year on both forms.
• Terminated Participant Vesting Information. Form 5500-SF filers now must provide the number of participants that terminated employment during the plan year with accrued benefits that were not fully vested.
• Multiple-Employer Plan Information. In accordance with the Cooperative and Small Employer Charity Pension Flexibility Act, the Form 5500 and Form 5500-SF now require multiple-employer pension plans and multiple-employer welfare plans to include an attachment that generally identifies each participating employer, and includes a good faith estimate of each employer’s percentage of the total contributions during the year.
• Schedule H. The instructions for line 1c(13) have been enhanced to set out what is an investment company registered under the Investment Company Act of 1940.
• Schedule MB. New Line 4f requires plans in critical status to indicate the plan year in which a plan is projected to emerge from critical status or, if the rehabilitation plan is based on forestalling possible insolvency, the plan year in which insolvency is expected.
• In Schedule SB, line 3 has been modified so that the funding target is reported separately for each type of participant (active, retired, or terminated vested); line 11b has been split into two parts: the calculation based on the prior year’s effective interest rate, and the calculation based on the prior year’s actual return; line 15 instructions have been expanded to address situations in which the AFTAP was not certified for the plan year; and line 27 and related instructions have been modified to reflect funding changes under the CSEC Act for defined benefit pension plans impacted by the act.
• Line 15 instructions have been expanded to address situations in which the AFTAP was not certified for the plan year. Line 27 and related instructions have been modified to reflect funding changes under the CSEC Act for defined benefit pension plans impacted by the act.

The Form 5500 annual filing requirements are only one of a growing series of informational returns and reports that employee benefit plan sponsors or administrators are likely to be required to file concerning their employee benefit plans annually or in response to other specified events depending on the nature of the plan and the circumstances.  In the case of health plans, for instance, the health care reforms of the Patient Protection & Affordable Care Act have resulted in a proliferation of new reporting requirements. Underfunding, plan termination or a series of other events also can trigger special reporting requirements for defined benefit pension plans.  Other special rules also may apply for profit-sharing defined contribution pension plans, as well as other types of employee benefit plans.  As proper understanding and timely fulfillment of these requirements is key to avoiding potentially significant liabilities, plan administrators, plan fiduciaries, employers or other plan sponsors and their service providers should consult with qualified experienced legal counsel to confirm they understand these requirements, conduct documented due diligence to confirm timely fulfillment of past filing requirements, take prompt action to correct any past deficiencies, and plan ahead and prepare for the upcoming 2014 filing deadlines by scheduling preparations and arranging to collect the necessary data to  timely meet these deadlines now.

For Advice, Training & Other Resources

If you need assistance resolving past Form 5500 or other filing exposures, or monitoring and responding to these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, an ABA Joint Committee On Employee Benefits Council representative, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a Fellow in the American College of Employee Benefit Counsel, ABA, and State Bar of Texas, Ms. Stamer has more than 25 years’ experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health plans and insurers about ACA, and a wide range of other plan design, administration, data security and privacy and other compliance risk management policies.  Ms. Stamer also regularly represents clients and works with Congress and state legislatures, EBSA, IRS, EEOC, OCR and other HHS agencies, state insurance and other regulators, and others.   She also publishes and speaks extensively on health and other employee benefit plan and insurance, staffing and human resources, compensation and benefits, technology, public policy, privacy, regulatory and public policy and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.

You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update distributions here including:

• Out-Of-Date, Unpatched Software Triggers HIPAA Security Sanction
• 2015 Tax Standard Mileage Rates Announced
• 12/5 Deadline For Insurers, Certain Self-Insured Health Plans To Submit 2014 Transitional Reinsurance Program Contribution Data
• OIG Report Pressures EBSA To Finalize ERISA Fiduciary Investment Advice Rule & Repeal or Restrict Small Scope Audit Rule
• TEGE Counsel To Assume Responsibility For Employee Plans, Exempt Orgs & IRA Technical Guidance in 2015
• Private Exchanges: Employer Health Program Panacea or Problem? Consider Carefully!
• Tell Senate To Pass Fix To ACA’s Full-Time Employee Definition
• Check Out Updated Kaiser Calculator For 2015 Zip Code-Specific Premium and Tax Credit Estimates for Health Marketplace Coverage Coverage
• Ebola Scare & New OCR Privacy Guidance Reminder To Prepare For Pandemic & Other Emergencies
• Stamer Kicks Off Dallas HR 2015 Monthly Lunch Series With 2015 Federal Legislative, Regulatory & Enforcement Update
• New DOL, IRS & HHS FAQ Confirms Employers Can’t Pay, Use HRAs to Reimburse Employees For Individual Policy Premiums
• Review Health Plans With Reference-Based Reimbursement Designs Under New Agency FAQ Guidance
• IRS Raises Health FSA Contribution Limit For 2015
• IRS Guidance Raises Concerns For Many Employers Offering “Skinny” & Other Limited Coverage Health Plans
• Supreme Court Delays Deciding Availabilities of ACA Subsidies For Coverage Purchased On Federal Exchange
• HHS Delays Enforcement Of HIPAA HPID Requirements
• Plan’s Purchase of Company Stock Triggers $6.48 Million Award Against ESOP Sponsor, Shareholder, Board Members & Trustees
• Government Contractors Get More Time To Comment On Burdens Of OFCCP Proposed Compensation Transparency Disclosure Regs
• IRS Announces Employee Plan Cost-Of-Living Adjustments
• Encourage Workers To Review Withholding As Part Of Annual Enrollment
• OFCCP FAQs On Veteran Hiring & Telework Rules
• Encourage Workers To Review Withholding As Part Of Annual Enrollment
• HHS Claims Average $69/Month Cost for Subsidized Coverage Shows ACA Success Challenged
• HIPAA Compliance & Breach Data Shares Helpful Lessons For Health Plans, Providers and Business Associates
• Making Wellness Work On A Shoestring Budget

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile here. For important information about this communication click here. 

NOTE:  This article is provided for educational purposes.  It is does not establish any attorney-client relationship nor provide or serve as a substitute for legal advice to any individual or organization.  Readers must engage properly qualified legal counsel to secure legal advice about the rules discussed in light of specific circumstances.

The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations.  The Regulations now require that either we (1) include the following disclaimer in most written Federal tax correspondence or (2) undertake significant due diligence that we have not performed (but can perform on request).

ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, or (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2014 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.