Form 5500 Revision Proposal Signals to get Plans Procedures Updated

Transcription

1 IUOE Lawyers Conference Form 5500 Revision Proposal Signals to get Plans Procedures Updated Joyce A. Mader O Donoghue & O Donoghue LLP Washington, DC October, 2016 #199040

2 5500 Revision Proposal Annual Reporting and Disclosure, Proposed Rules 81 Federal Register (July 21, 2016) Department of Labor Proposed Revision of Annual Information Return/Reports 81 Federal Register (July 21, 2016) DOL, IRS/Treasury, PBGC Comment due date extended until early December 2

3 Reasons for Revision Enforcement Agencies very clear that enforcement is one of the primary goals of revision. Questions and structure will permit targeting of enforcement resources Disclosure Annual report always viewed as important participant disclosure document. Policy research Additional info will support policy research by agencies, Congress and others. 3

4 General Comments Revised form requires more detailed information DOL has been receptive to suggestions where language was unclear or question would not produce data sought. DOL not receptive to burden argument. If plans are not able to produce required data now they need to be able to do so by the time the Form comes into use. May require programming changes. 4

5 Issues More questions on plan policies and procedures More plans required to file that were previously exempt Subsequent slides are selection of those issues of interest to union and multiemployer plans. 5

6 ISSUE: Uncashed Checks DC plans must report uncashed checks as of PY end If there are uncashed checks must report same info as of prior PY end Must report number and dollar vaue of uncashed checks Plan must describe procedures used to verify a participant or beneficiary address before a check is mailed. If plan does not currently have a procedure, one should be developed. 6

7 ISSUE: Missing Participants Plan must describe procedures for locating missing participants. Proposal comments that plans may use procedures described in FAB to search for missing participants and beneficiaries. Recent DOL audits of both DB nd DC plans have focused on plan procedures for locating missing participants. 7

8 ISSUE: Hard to Value Assets Revision requires more detailed reporting of hard to value assets. Plan accountants should annually discuss valuation methodology with Trustees. DOL has issued no guidance but will challenge plans that do not exercise due diligence regarding valuation of hard to value assets. 8

9 ISSUE: Harmonizing Schedule C and 408(b)(2) Reporting Schedule C and 408(b)(2) fee reporting are similar but the requirements are different enough to cause confusion. Good news requirements will be harmonized with revision. Non-taxable reimbursed trustee expenses no longer to be reported as indirect compensation but reported in administrative expenses. 9

10 ISSUE: ERISA 411 Screening Plan asked to indicate if person or vendor disqualified under 411 was hired or retained. To respond, plan must have process to screen. Vendors should have their own process and can be asked to certify. Employees should be screened. 10

11 ISSUE: Reporting Uncollectible Participant Contributions to 401(k) DOL guidance does not permit multiemployer 401(k) plans to write off the collection of participant contributions to 401(k) and other plans. If Trustees have made diligent efforts to collect, they do not engage in a PT but delinquent employer does so uncollected participant contributions must be reported. See PTE DOL looking for comments on reasonable period when uncollected contributions can stop being reported. 11

12 ISSUE: Welfare Plans Previously Exempted Will be Required to Report Small and unfunded welfare plans that provide health care will be required to report. Unfunded dues financed plans that provide medical care will be required to report. Not entirely clear when a plan provides medical care. See ERISA 733(a)(2). For example, does a union that pays the COBRA premium of a multiemployer plan for its unemployed members sponsor a plan that provides medical care? DOL is considering but did not say exempted. 12

13 ISSUE: Penalty of Perjury Compliance Declaration Broad declaration: Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/ report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete. DOL says they will not prosecute for inadvertent errors but suggests a thorough review of operations, policies and procedures for which there are questions on Form is in order. 13