On July 21, 2016, a proposed rule was published by federal regulators that seeks to modernize and improve the Form 5500 annual return/report that is filed by employee benefit plans. In general, the changes are expected to apply for plan years beginning on or after Jan. 1, 2019.
While the Form 5500 is periodically updated so that it stays current with legal and market developments, these proposed updates are significant because of their focus on group health plans. Significantly, the proposed rule would eliminate the current filing exemption for small group health plans and require group health plans to complete a new detailed schedule.
In addition to these changes, the proposed changes would expand the Form 5500’s financial and compliance reporting, analytics capability and service provider information.
Employers should monitor these proposed changes to the Form 5500 and consider how the changes would affect them if they are finalized. Employers with small group health plans that have been exempt from the Form 5500 filing requirement may wish to contact service providers to evaluate their options for Form 5500 filings.
Employee benefit plans—retirement plans and welfare plans—are generally required to file an annual return/report concerning, among other things, the financial condition and operations of the plan. Filing the Form 5500 Annual Return/Report of Employee Benefit Plan, together with any required attachments and schedules through the ERISA Filing Acceptance System (currently EFAST2) generally satisfies this annual reporting requirement.
The Department of Labor (DOL), Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (collectively, the Departments) jointly oversee the Form 5500 series.
Because the Form 5500 is the primary source of information about the operation, funding, assets and investments of employee benefit plans, the Departments periodically update the Form 5500 in order to stay current with legal requirements and market developments.
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