Chapter 13 Government Reporting

Transcription

1 Government Reporting TRS Required Form and Document Preparation Responsibilities Following is a summary of Transamerica Retirement Solutions governmentrequired form and document preparation services. TRS is responsible for: Preparing reporting and disclosure forms required by the Department of Labor (DOL) and the Internal Revenue Service (IRS), including: IRS forms Application for Determination: 5300, 5307, 5310, 8717, Schedule Q, as applicable Distributions from Qualified Plans: 1099-R, 1096, 945 Change in Plan/Trust Year: 5308, as needed Annual Return/Report of Employer Benefit Plan: 5500 or 5500-SF, with the following schedules, as applicable: o Schedule A: Insurance Information o Schedule C: Service Provider Information o Schedule D: DFE/Participating Plan Information o Schedule H: Financial Information, large plans o Schedule I: Financial Information, small plans o Schedule R: Retirement Plan Information Application for Extension of Time (for filing Form 5500): 5558 Payment of Excise Taxes Related to Employee Benefit Plans: 5330 Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits, as may be required by IRS/SSA: 8955 Participant and/or DOL disclosure documents Summary Plan Description (SPD) Summary of Material Modification (SMM) Safe Harbor and Automatic Enrollment Notices, if applicable Participant statements of account Statements for terminated participants Summary Annual Report (SAR) 1

2 Applying for initial or continuing plan qualification and negotiating plan qualification issues with the IRS: Preparation of IRS filing Form 5300 series subsequent to the initial plan qualification, and demonstrations associated with a request for a favorable Determination Letter on the plan s initial or continuing qualification Negotiation of plan qualification issues with the IRS, preparation of any remedial amendments requested by the IRS in order to issue a favorable Determination Letter on the plan and preparation of any amendment to the plan and/or trust required by new legislation to maintain the qualified status of the plan Preparing filings required for plan mergers, plan-to-plan transfers and consolidations Preparation of Form 5310, as applicable, and related attachments associated with a request for an IRS favorable Determination Letter regarding plan mergers, plan-to-plan asset transfers or consolidations of assets Providing services for plan terminations In the event of a plan termination, upon request from the plan sponsor and subject to TRS s consent, we provide plan termination services for an additional fee quoted in advance. Plan termination services include, but are not limited to: Preparation of Form 5310 for final plan qualification determination by the IRS Production of plan amendments as necessary Distribution of assets to participants TRS must receive any fees before services are provided under this type of contract. Plan Sponsor Responsibilities Regarding Form Preparation TRS prepares IRS and DOL forms based on the information and data provided by the plan sponsor. TRS is not responsible for any inaccurate or incomplete forms resulting from incomplete information or data furnished by the plan sponsor, or its untimely receipt. The plan sponsor must review all forms carefully before executing and filing them with the appropriate government agency. Plan sponsors must review all forms carefully before executing and filing them with the appropriate government agency. 2

3 Annual IRS Form 5500 Filings Your plan is subject to an annual reporting requirement that is satisfied by filing a Form 5500 or Form 5500-SF, Annual Return/Report of Employee Benefit Plan and its related schedules each year. Filing must be completed, including an Accountant s Opinion if applicable, by the end of the seventh month after plan year-end. An automatic extension of up to 2½ months can be requested by filing Form 5558 with the IRS. Based on the information provided by the plan sponsor, TRS prepares your plan s Form 5500 and related schedules. The completed forms are posted online for the plan sponsor to review and electronic signature. If an accountant s opinion is needed it must be sent to TRS as a pdf document so that it can be attached to the form 5500 prior to posting If there is to be a delay in the filing, TRS prepares Form 5558 for an extension of time to file Form TRS will submit the Form 5558 for filing with the IRS before the end of the seventh month following the end of the plan year. Form 5500 Schedules and Attachments TRS prepares some of the schedules that must be filed along with the Form 5500 each year. Please see the first section of this chapter for a listing of those applicable schedules that TRS prepares. In addition, the plan sponsor provides a copy of the Accountant s Opinion, if applicable. Following is a list of the schedules and attachments that may be required: Schedule A: Insurance Information Schedule C: Service Provider Information Schedule D: DFE/Participating Plan Information Schedule G: Financial Transaction Schedules Schedule H: Financial Information, large plans Schedule I: Financial Information, small plans Schedule R: Retirement Plan Information Schedule of Assets Accountant s Opinion, if applicable If your annual filing is to be delayed, TRS prepares Form 5558 for an extension of time to file Form 5500, and will forward to the IRS for filing by the end of the seventh month after plan year-end. Other IRS Forms Circumstances may require the submission of one or more of the IRS forms described below, which TRS prepares when they are needed. The following descriptions will help you to familiarize yourself with forms that your plan may need to have filed in the future. Form 5330: Return of Excise Taxes Related to Employee Benefit Plan This form is used to report and pay penalty or excise taxes applicable to prohibited transactions, late employee deferral contributions, nondeductible contributions, excess contributions to qualified 401(k) plans, including corrections for failed ADP/ACP tests after 75 days following plan year-end [6 months for an Eligible Automatic Enrollment Arrangement (EACA)], and reversions of qualified plan assets to the employer. Form 8955-SSA 3

4 Forms 5300, 5307, 8717, 8905 and Schedule Q: These forms are used in the application for a Letter of Determination from the IRS, to grant or continue the qualified status of a plan and plan amendments. Form 5308: Request for Change in Plan/Trust Year Form 5310: Application for Determination for Terminating Plan This form is an application for a Letter of Determination from the IRS on the qualified status of a plan upon its termination. Form 5310A: Notice of Plan Merger or Consolidation, Spinoff, or Transfer of Plan Assets or Liabilities Form 6088: Distributable Benefits from Employee Pension Benefit Plans This form may be required when a money purchase pension plan is underfunded. If it is needed, it must be attached to Form 5310 when applying for a Letter of Determination upon plan termination. Form 1099-R: Distributions from Pensions, Annuities, Retirement or Profit- Sharing Plans, IRAs, Insurance Contracts, etc. This is a tax reporting form for distributions from pension or profit-sharing plans, IRAs, annuities, insurance contracts and the like. Participant benefit distributions from a retirement plan must be reported on Form 1099-R, including taxable and nontaxable payments directly to a participant or beneficiary, rollovers to an IRA or another qualified plan and loan offsets and loans that are deemed to have been distributed. TRS prepares all of the Forms 1099-R for these distributions, but does not prepare them for distributions completed by the plan trustee. Forms 1099-R for distributions made in the previous calendar year are due to participants by January 31 of the subsequent calendar year. If your plan is new to TRS and is in the process of transferring assets and records to us, we will only issue Forms 1099-R for those distributions paid from assets held by TRS. Your prior service provider should issue them for distributions paid prior to the asset transfer. Form 1096: Annual Summary and Transmittal of U.S. Information Returns This form summarizes all of the Forms 1099-R issued in a calendar year. It is transmitted to the IRS by February 28 of the subsequent calendar year for all Forms 1099-R issued by TRS. Form 945: Annual Return of Withheld Federal Income Tax This form is used to report all federal income tax withheld on all Forms 1099-R issued during a calendar year. TRS completes and files this form for all Forms 1099-R we issue. If your plan is new to TRS, you do not need to file this form for any federal income tax withheld on Forms 1099-R issued by TRS. However, if during part of the year you or your prior service provider withheld federal income tax on plan distributions and issued Forms 1099-R to report them, you or your prior service provider needs to report that information on a separate Form 945 and file it with the IRS. 4

5 Annual Disclosure Requirements Summary Annual Report (SAR): The SAR is a summary of the annual plan activity reported on the plan s Form 5500 Annual Return/Report of Employee Benefit Plan and related schedules that are filed with the IRS each year. The IRS forwards a copy of all plans Form 5500 filings to the DOL. DOL rules require that an SAR be distributed to all participants and beneficiaries receiving plan benefits no later than two months after the due date of the Form 5500 filing, including extensions. TRS prepares your plan s SAR and forwards it to you for distribution to your plan s participants and beneficiaries. Information disclosed on the SAR must include: The plan name and employer identification number (EIN) The period covered by the SAR (plan year) A basic financial statement on the plan A notice advising participants that: A copy of the full Annual Return/Report is available by request They may obtain additional information regarding the Annual Return/Report They may inspect the Annual Return/Report at a location designated by the employer, or at the DOL As with all of your important plan records, you should keep a copy of each year s SAR with the plan s permanent records. The SAR must be distributed within two months of the Form 5500 filing date, including extensions. Operational Defects Sponsors of tax-qualified retirement plans are encouraged to establish administrative practices and procedures ensuring that plans are operated in accordance with the tax qualification requirements. Even with practices and procedures in place, operational defects can and do occur. An operational defect is a failure to comply with the plan s provisions when administering the plan. Please refer to the chart in Chapter 2 for key dates to remember so deadlines will be met. Example: If the 401(k) portion of your qualified plan fails the 401(k)/ADP discrimination test and you elect to correct the failure by returning excess contribution amounts to applicable HCEs, the excess contribution amounts are subject to a 10% excise tax and included in these participants reportable income for the current year if refunds are made later than 2½ months after the end of the plan year for which the test was performed. This refund requirement is increased to no later than 6 months after plan year end for an Eligible Automatic Enrollment Arrangement (EACA). A Form 5330 must then be filed with the IRS, and the additional 10% excise tax must be paid by the employer. 5

6 IRS Correction Program for Plan Sponsors The IRS has created a comprehensive system of correction programs for sponsors of qualified retirement plans. Called the Employee Plans Compliance Resolutions Systems, or EPCRS program, it permits plan sponsors to correct certain plan defects and thereby continue to provide participants with retirement benefits on a tax-favored basis and so avoid plan disqualification. Annual Compliance Testing and Tax Return Filing: Timing and Procedure Regulations require that your plan perform and pass annual compliance testing to retain its ongoing tax-qualified status. Please refer to chapter 10 for a list of tests that may be performed annually, if they are applicable to your plan. If corrections are necessary to pass any of the various compliance tests, they must generally be completed by the last day of the plan year following the plan year being tested in order to maintain the plan s tax qualification. Please see the summary chart in Chapter 2 for some of the common compliance testing, reporting and disclosure deadlines for qualified retirement plan sponsors. TRS requests census and other compliance testing related information from you on an annual basis, as well as when situations requiring it arise. In order to meet testing and filing deadlines, it is important that you provide the requested information by the due date indicated in the correspondence accompanying the data request. Once you provide the necessary information, TRS completes the required testing and tax return forms. All testing and tax return forms are based on the information you provide to TRS, so it is important that you submit accurate and complete information. While your plan s tax return forms are prepared by TRS, it is ultimately the plan sponsor s responsibility to make sure that any additional required information such as the Accountant s Opinion if needed, is attached and that the form is electronically signed and submitted to the Department of Labor. 6