Form 5500: What is it good for absolutely something.

Transcription

1 Form 5500: What is it good for absolutely something. May 22, 2013 Nationwide Financial, Dublin, OH Presented by: Thomas E. Clark, Jr. J.D. LL.M. Chief Compliance Officer Fiduciary Risk Assessment LLC and PlanTools, LLC Copyright May 2013 FRA/PlanTools ALL RIGHTS RESERVED 1 Who is FRA PlanTools? n Boutique consulting firm specializing in risk mitigation solutions for those that sponsor retirement plans and those that service them. n Plan expense benchmarking including on-thespot online tool with actual data from over 2,000 retirement plans. n Industry experience in analyzing and implementing fiduciary best practices. 2 1

2 Who is Tom Clark? n Former ERISA litigator n Current fiduciary consultant n Editor-in-Chief of the FRA PlanTools Blog and the ERISA Litigation Index, which tracks and updates important ERISA fiduciary court cases 3 Goals of Presentation n Review background of Form 5500s n Understand information found in Form 5500s including recent changes n Discuss recent hot topics in ERISA litigation n Learn how the Form 5500 can be used to identify litigation issues in other plans 4 2

3 More Information n n Password: CLS n What s there? q Copy of presentation q Links from all the slides q PDFs referenced in presentation 5 Background 6 3

4 Goals of this Section n Quickly review basic information about Form 5500 s n Learn/review unique way of finding Form 5500 s 7 What is the Form 5500? n Similar to Form 1040 filed with IRS n For plans subject to Title I of ERISA n Retirement plans and welfare plans n For detailed information, see Form 5500 Instructions posted by the DOL 8 4

5 Who is the Form 5500 filed with/who uses it? n Department of Labor (DOL) n Internal Revenue Service (IRS) n Pension Benefit Guaranty Corporation (PBGC) 9 When is the Form 5500 filed? n Last day of the seventh calendar month after the end of the plan year q Plain English: (usually) July 31st n Extensions n Practice Point: 5500 data is always a year behind 10 5

6 Where can I find Form 5500s? n Larkspur n freerisa.com n The DOL website: ERISA Filing Acceptance System or EFAST2 q 11 Where can I find Form 5500s? 12 6

7 Where can I find Form 5500s? 13 Where can I find Form 5500s? 14 7

8 Where can I find Form 5500s? 15 Where can I find Form 5500s? 16 8

9 Where can I find Form 5500s? 17 Where can I find Form 5500s? 18 9

10 What s useful in the 5500? 19 Goals of this Section n Learn/review different sections/schedules of the Form 5500 filing n Learn/review the difference between filing requirements of Large Plans and Small Plans n Learn/review plan demographic and plan feature information to gain understanding of target plan 20 10

11 Form 5500 Filing Table of Contents n Form 5500 n Schedule A Insurance Information n Schedule C Service Provider Information n Schedule D DFE/Participating Plan Information q Direct Filing Entity n Schedule H Financial Information n Schedule R Retirement Plan Information n Auditor s Report 21 Large Plans v. Small Plans n Large Plan = 100 or more participants at beginning of plan year n Large Plans must include an auditor s report n Small Plans have a limited Form 5500-SF ( Short Form ) n For more information faq_auditwaiver.html 22 11

12 Form 5500: Part I - Annual Report Identification Information 23 Form 5500: Part II Basic Plan Information 24 12

13 Form 5500: Part II Basic Plan Information 25 Form 5500: Part II Basic Plan Information 26 13

14 Form 5500: Part II Basic Plan Information n Plan Codes Found in Form 5500 instructions. q Cheat sheet at 27 Form 5500: Part II Basic Plan Information n Plan Codes Nationwide Savings Plan q 2F - ERISA section 404(c) plan q 2G - Total participant-directed account plan q 2J - Code section 401(k) feature q 2K - Code section 401(m) arrangement q 2E - Profit sharing q 2R - Participant-directed brokerage accounts provided q 2S - Plan provides for automatic enrollment q 2T - Plan uses default investment account q 3H - Plan sponsor(s) is (are) a member(s) of a controlled group 28 14

15 Form 5500SF: Part I - Annual Report Identification Information 29 Form 5500SF: Part II Basic Plan Information 30 15

16 Form 5500SF: Part III Financial Information $3,693,491/46 = about $80,300 p/p 31 Form 5500SF: Part IV Plan Characteristics & Part V Compliance Questions 32 16

17 Form 5500SF: Signature Block 33 Tussey v. ABB, Inc. & Tibble v. Edison International 34 17

18 Goals of this Section n Learn/review three hot topics from the Tussey v. ABB, Inc. and Tibble v. Edison International cases n Understand whether similar issues in other plans can be seen in the Form 5500 filings 35 Tussey v. ABB, Inc. (W.D. Mo. Mar. 31, 2012) n Excessive recordkeeping/administrative fees n Imprudent use of Fidelity Target Data Funds n Failure to use least expensive share class n Learn more:

19 Tibble v. Edison International (9 th Circuit, March 21, 2013) n Excessive administrative fees n Failure to use least expensive share class n Learn more: 37 Form 5500SF Excessive Administrative Fees $2,330/46 = about $50 p/p 38 19

20 Form 5500: Excessive Administrative Fees Schedule C: Service Provider Information n n Expanded in 2009 to include more information about indirect compensation First prong in DOL s attempt to address high fees q Second Prong: 408(b)(2) Service Provider Disclosures q Third Prong: 404(a)(5) Participant Disclosures q (Fourth Prong): DOL Audits 39 Form 5500: Excessive Administrative Fees Schedule C: Service Provider Information 40 20

21 Form 5500: Excessive Administrative Fees Service Codes n Learn more: Schedule C Code Article by FRA PlanTools 41 Form 5500: Excessive Administrative Fees 42 21

22 Form 5500: Excessive Administrative Fees $3,355,936/44,577 = about $75 p/p 43 Form 5500: Target Date Funds 44 22

23 Form 5500SF: Target Date Funds n No investment information found in the short form 5500 n All is not lost: q Google the name of the plan sponsor and 401(k). It is surprising the number of times I have found the plan s SPD just sitting unprotected online. q Brightscope.com (probably not) 45 Form 5500: Mutual Fund Share Classes 46 23

24 Form 5500: Mutual Fund Share Classes 47 Form 5500: Mutual Fund Share Classes 48 24

25 Form 5500SF: Mutual Fund Share Classes n No investment information found in the short form 5500 n All is not lost: q Google the name of the plan sponsor and 401(k). It is surprising the number of times I have found the plan s SPD just sitting unprotected online. q Brightscope.com (probably not) 49 More Information n n Password: CLS n What s there? q Copy of presentation q Links from all the slides q PDFs referenced in presentation 50 25

26 Thomas E. Clark, Jr., J.D. LL.M. Chief Compliance Officer Fiduciary Risk Assessment LLC PlanTools, LLC D Providence Rd., Suite 752 Charlotte, North Carolina Blog: blog.fraplantools.com LinkedIn: thomaseclarkjr 51 26