Less Than Perfect Filings Wednesday, May 1, 2013

Transcription

1 Less Than Perfect Filings Wednesday, May 1, 2013 Scott Albert, DOL Kristina Kananen, APA QPA QKA DATAIR Employee Benefit Systems, Inc. TODAY S DISCUSSION EFAST Rules Before a Filing is Accepted Attachment Rules EFAST Rules that determine Filing Status Correcting Any Processing_Stopped, Filing_Error or Filing_Received with Warnings statuses How to Amend a Filing Form 5558 Missed Filings Series Surprise and Optional Items 1

2 RULES BEFORE EFAST ACCEPTS A FILING Filings have to get thru the gate before being Validated Invalid Signing Credentials will prevent a filing from being received For Filing Years 2011 and 2012, Signature Validation is in place. PDF attachments may not meet EFAST2 criteria Protected or restricted PDFs can not be accepted by EFAST Often, just printing and rescanning the pdf will correct the problem If a VIRUS_DETECTED status is given, it is often a combination of the anti-virus software and the pdf. Notify EFAST2 with the rejected pdf attachment. Rescan the attachment RULES BEFORE EFAST ACCEPTS A FILING The requirements for the XML file may have been violated (Schema Validation Error) Entering only part of an address on a Schedule C or Schedule A will cause a Schema Validation Error. Entering an invalid character in a field will cause a Schema Validation Error (Remember the & debacle for 2009) Unprocessable Filings have not been received by EFAST and the clock is still ticking. This is one reason to be sure to allow mistake time before the filing deadline Notice of the Unprocessable filing will give the error(s) which must be corrected Filing must be begun again, signed again and re-transmitted 2

3 A WORD ABOUT ATTACHMENTS All PDF attachments are encrypted when transmitted to EFAST2 and then de-crypted upon receipt. An invalid PDF file for EFAST2 purposes can still be opened and appear to be valid. PDFs can not have any protections or restrictions on them or they are invalid. Open the PDF in Acrobat Reader and right click on mouse. Security tab will show any security or restrictions. Print and rescan. The 8955-SSA is NEVER an acceptable attachment for EFAST2 filing. This applies to pre-2009 plan years and the old SSA form as well. A WORD ABOUT ATTACHMENTS Personal information is not to be included in any attachment for EFAST2. EFAST2 has an Attachment Review to ensure no personal information is part of the attachment. Review period is 20 days after the receipt of the filing. A message is posted with the 5500 and schedules or 5500-SF that the attachments are under review The review will result in one of three actions: Permanently revoke public access to one or more of the attachments Revoke access to the entire filing including attachments Clear the attachments for public viewing Portrait format for all PDFs is heartily encouraged. 3

4 THERE ARE RULES THAT DETERMINE FILING STATUS Once Accepted by EFAST Clock Stops Could be restarted if problems are found in the filing As stated in the EFAST2 User Guide So, there are still rules which will result in one of these statuses Processing_Stopped = Stop Edit Checks invoked Filing_Error = Error Edit Checks invoked Filing_Received = Warning Edit Checks invoked Filing_Received = No Edit Checks Invoked Filing_Unprocessable = Invalid Attachment, missing signature THERE ARE RULES EVERY FILING MUST FOLLOW Data Element Requirements (DER) Governs Every XML File Transmitted to EFAST2 Edit checks are Authored by PBGC (B-XXXs) IRS (I-XXXs) IRS and DOL jointly (J-XXXs) DOL (P-XXXs and X-XXXs) 1,445 Published Requirements Most under the control of Software Developers Valid Characters in fields Correct math 165 Edit checks of varying severity for Defined Contribution Plans All pertain to the way certain questions are answered Software will notify you of edit checks invoked 4

5 THERE ARE RULES THAT CAN STOP A FILING There are 11 Edit Checks with a Stop Severity, meaning the processing of the filing is stopped and the filing must be corrected 5 can be invoked if there are inappropriate or invalid SignerIDs and/or PINs (I-104, I-104SF, P-227, P-227SF, P-227A) 2 can be invoked if there are no Characteristic Codes entered on the 5500 or 5500-SF (J-509, J-509SF) 4 can be invoked if a Form 5500-SF is being filed, but the filer is not eligible to file the Form 5500-SF P-230SF >120 participants at BOY, X-092SF No to all assets invested in eligible assets, X-094SF No to waiving the audit, and X-120SF DFE SignerID and PIN used to sign the filing CORRECTING A Processing_Stopped Status While the processing has stopped, the filer must transmit an Amended filing to correct the problem which caused this status. The Signature Validator begun by EFAST for the 2011 filing year should eliminate most of the invalid USERIDs and PINs for most software providers. If a Processing_Stopped Status is received, but not corrected by an amended filing, late filing penalties will be assessed. 5

6 THERE ARE RULES THAT RESULT IN ERRORS Most of the Edit Checks are Errors Some Examples of Error Edit checks Forgetting to fill in the EIN or PN on the 5500/5500-SF Or having different EINs and/or PN on the Schedules attached to the Form 5500 Not including the Mailing Address for the Plan Sponsor Answering Yes to any Compliance Question on Form 5500-SF, Schedule H or Schedule I, but not entering the dollar amount in the amount field Including an Effective date that is not between 1/1/1800 and the last day of the plan year Having plan year dates that are less than 12 months, but not checking the Short Plan Year return/report indicator THERE ARE RULES THAT RESULT IN ERRORS Error Examples, Continued Marking Item 10 on Form 5500 for specific current year schedules, but not including them OR Including the Schedules, but not checking them in Item 10. Checking Insurance in Item 9a(1) and/or 9b(1) and not including a Schedule A Not answering Item 10h on Form 5500-SF or 4m on Schedule H or Schedule I for a DC Plan Not including an Attachment Type of Accountants Opinion for a Schedule H filer or a Schedule I filer answering No to question 4k Not including a Schedule of Assets Held attachment if 4i is Yes on a Schedule H and not including a 5% Schedule of Transactions when 4j is Yes 6

7 THERE ARE RULES THAT RESULT IN ERRORS Error Examples, Continued Entering an EIN for the Plan Sponsor which begins with 69, 70, 79, 96 or 97 Plan Sponsor is required to obtain a new EIN No address for the Plan Administrator and neither the Same as Plan Sponsor Name box nor the Same as Plan Sponsor Address are checked Entering the same EIN and/or PN on line 5b on Schedule H or I, or on Line 13c of the Form 5500-SF as is entered in Lines 1b and 2b on the Form 5500 or Form 5500-SF Entering amounts greater than zero for DFE assets on Schedule H (Lines 1c9 thru 1c12) and not including a Schedule D Filing a 2012 plan year on a 2011 form after 12/31/2012 THERE ARE RULES THAT JUST WARN Warning edit checks include A filing that is transmitted more than 7 months after the end of the plan year and Item D on the Form 5500/Form 5500-SF has no entry Entering amounts greater than 0 on the Pooled Separate Accounts line of the Schedule H and not including a Schedule A Entering amounts greater than 0 on the Value of Funds held in insurance company general account and not including a Schedule A 7

8 CORRECTING ERRORS AND WARNINGS Filing_Error status must be resolved by Correcting the error(s) Transmitting an amended filing, referencing the AckID of the original filing Filing_Received with Warnings must be Reviewed to determine if the warning is important enough to Warrant amending the filing. If so, corrections should be made and an amended filing transmitted, referencing the AckID of the original filing. Filing_Received without any Warnings You are done, unless an inquiry is received from the IRS or DOL INCOMPLETE FILINGS Most common incomplete filing is for a large plan where the Audit Report is not available as of the filing deadline. Amended filing must be filed ASAP IRS will send a letter within a few days after filing, which will provide for 45 days in which to respond and file a complete filing. 8

9 AMENDED FILING HOW TO For 2009, 2010, 2011 and 2012 plan years file the forms for that filing year For pre-2009 plan years: File the current year (2012) Form 5500, Schedules A, D, H, and/or I Any other Schedule required for the filing must be the correct year schedule: Schedule B, or SB or MB Schedule E Schedule P Schedule R Schedule T The Schedule C is the only Schedule which can be current year or correct year. Form 5500-SF can not be filed for a year prior to 2009 And now a word about IRS Notices The IRS has discontinued Proposed Notices CP-213N Proposed Penalty Notice for Late Filing of Form 5500, Annual Return/Report of Employee Benefit Plan CP-213I, Proposed Penalty Notice for Incomplete Filing of Form 5500 Penalty Letters will be the first notice Plan Administrators/Sponsors will receive. First Notice that a Form 5558 was not filed will have a dollar penalty in it. 9

10 Which brings us to Form 5558 Processing Or, I feel your pain Problems with the Form 5558 in the past File form 5558s sooner rather than later There is no penalty for not using an extension New plans can take 6 weeks to be entered into the system, mid- June should be the latest a 5558 for a new plan is filed. Take the forms to the Post Office and have them stamped The rule is that you must have proof of mailing Consider providing a copy to your client MISSED FILINGS DOL issued Changes to the Delinquent Filer Voluntary Compliance Program (DFVCP) Published in the Federal Register on 1/29/13 Last time changes are expected to be published Future changes will be posted to the website DFVCP page includes Form 5500 Version Selection Tool Penalty Calculator and Online Payment Checks can still be mailed with a copy of the Form 5500 Penalty for small plans is $10/day to a maximum of $750, or a maximum of $1,500 for more than one report Penalty for large plans is $10/day to a maximum of $2,000, or a maximum of $4,000 for more than one report Penalties can not be paid from plan assets 10

11 MISSED FILINGS DFVCP available to Title I plans only One-participant plans not covered PBGC has agreed to not assess penalties for late filings where the conditions of DFVCP have been satisfied. IRS expects to issue separate guidance to provide certain penalty relief under the Code for delinquent Form 5500 and Form 5500-SF Annual Returns/Reports filed for Title I plans where: Conditions of DFVCP have been satisfied Any requirements imposed by IRS in such separate guidance are satisfied DVFCP filings MISSED FILINGS For 2009, 2010, 2011 and 2012 plan years must use the correct year Form 5500 and Schedules or Form 5500-SF For pre-2009 plan years, must file: Current year Form 5500, Schedule A, Schedule D, Schedule G Schedule H or Schedule I Attach a pdf of the correct year (Year that matches Plan Year Beginning): Schedule B, MB or SB Schedule E Schedule P Schedule R Schedule T Schedule C (Optional can use the current year, but must follow the current year instructions.) Correct year schedules are available on under Forms and Filing Instructions. 11

12 SERIES SURPRISE Same as Plan Sponsor Name and Same as Plan Sponsor Address checkboxes added to Plan Administrator section on Forms 5500 and 5500-SF Logic says that if the Plan Administrator Name and Address is the same as the Plan Sponsor, check both boxes. The Same as Plan Sponsor Name box only means the name and address are the same as the Plan Sponsor. The Same as Plan Sponsor Address box means the Plan Administrator s name is different than the Plan Sponsor s, but the address is the same. If the Plan Administrator s Name is the same as the Plan Sponsor s, but the address is different, fill in all the information for the Plan Administrator SERIES OPTIONAL ITEMS Preparer Name, address and phone number Information provided on the form will be disclosed Trust Name and TIN Recommend completing this information on Schedule H, Schedule I and Form 5500-SF Hoping it will satisfy the IRS tracking of active TINs and eliminate deactivating TINs until the trust has ended 12

13 QUESTIONS? LESS THAN PERFECT FILINGS Kristina Kananen, APA QPA QKA DATAIR Employee Benefit Systems, Inc. 735 N. Cass Avenue Westmont, IL