What s Up With the Form 5500-SUP?

Transcription

1 What s Up With the Form 5500-SUP? Janice M Wegesin [questions@form5500help.com] Janice M. Wegesin, CPC, EA President, JMW Consulting, Inc. Janice M. Wegesin is the president of JMW Consulting, Inc. in Petoskey, Michigan. She specializes in compliance matters associated with qualified retirement plans as well as employee welfare benefit programs, with an emphasis in reporting and disclosure. [See Ms. Wegesin is an Enrolled Agent, enrolled to practice before the Internal Revenue Service, and has earned the designation of Certified Pension Consultant from the American Society of Pension Professionals and Actuaries (ASPPA). She is the author of the Form 5500 Preparer s Manual (Wolters Kluwer). 1

2 Disclaimer The information and opinions presented today are those of the presenter and do not necessarily represent the opinions or positions of NIPA. Proposed Form 5500-SUP Which filers must provide the data electronically Why paper filings may be preferable for some filers The significance of the public disclosure of this data New data collection considerations 2

3 To date, the IRS has posted the following Draft Form 5500-SUP [10/21/2014] Official Guidance Draft Instructions for Form 5500-SUP [12/18/2014] Federal Register Notice and Request for Comment [12/23/2014] Comment due date: February 23, 2015 Effective for 2015? The effective date is problematic for service providers Sufficient time to adapt electronic systems Data collection issues, both internal and external Some issues (e.g., nondiscrimination testing) may not be finalized by filing due date Communicating new data needs to plan administrators/plan sponsors ASPPA letter pushes for delayed effective date 3

4 Focus on Why The Notice focused on telling us why the IRS wants this information Some data was collected prior to the implementation of EFAST2 Doesn t consider the current business model for plan services Why Preparer Information Form section. 4

5 Why Trust Information Form section. Why Plan Document Items Form section. 5

6 Why 401(k) Testing Form section. It should be noted that draft instructions seem inconsistent with language on form. Why Coverage Testing 6

7 Tricky Data Collection Item Query: Are you carefully reviewing trust assets for potential UBTI? May be complicated by self directed brokerage Form section. Why - Distributions nothing! Instructions indicate IRS wants a carve out of distributions to active participants (e.g., hardship withdrawals, any other payments in-service) Could easily be captured by simply further bifurcating the financial information sections of Schedules H/I and Form 5500-SF 7

8 Items on Form; No Instructions Note: ESOP items appear in Notice Note: deduction item does not appear in Notice Paper or E-file? Items will be worked onto Form 5500 and Form SF for those required (or opting) to provide the information electronically Count all federal tax reports of any kind filed by either the plan sponsor or the plan administrator (includes Forms W-2, 1099-MISC, 1099-R, 940 series, etc.) Similar to rule for mandatory e-filing of Form 8955-SSA that begins for 2014 plan years If count is 250 or more, must electronically file the data. 8

9 Consequences A plan required to file the data electronically that fails to do so will be deemed to have failed to file the Form IRC 6652(e) imposes a penalty of $25/day up to $15,000 Presumably, SUP may be part of late filing cured under DFVC Otherwise? Creates limbo reasonable cause opportunity similar to missed Form 8955-SSA Any Advantage to Paper? Although EFAST2 has the ability to mask data entry, there s been no indication that any SUP data filed electronically will be masked. Paper filings are subject to the same public disclosure, but it s unclear how quickly that will happen. Section of SUP that ties the paper filing to the EFAST2 filing: 9

10 More Paper Filing Issues Due date appears to be same as Form 5500 series Paper SUP filing requires insertion of RefAckId, which is only available after related EFAST2 filing is Accepted. Paper SUP filing requires signature of plan administrator or plan sponsor (generally, not both) Difficult to make this all happen on October 15, unless you like stress! Closing Thoughts It will be very challenging to manage the SUP requirement if effective date not pushed back at least one year. IRS must improve instructions and consider using check box format or moving some items onto Form 5500 series (e.g., adding some items instead to plan feature codes lines; modifying financial information sections, etc.) This could turn into IRS s very own version of DOL s Schedule C debacle if refinements aren t made and the requirement rushed. 10