10/17/2016. ChChCh Changes Form 5500 in the Years Ahead. Janice M Wegesin

Transcription

1 1 ChChCh Changes Form 5500 in the Years Ahead Janice M Wegesin questions@form5500help.com 2 1

2 Disclaimer The information and opinions presented today are those of the presenter and do not necessarily represent the opinions or positions of ASPPA. 3 We Want Your Opinion! Polling #1 - which category best describes your role with regard to Form 5500: A. Preparer / reviewer (including actuaries) B. Oversee persons preparing/set firm practices and standards C. User of Form 5500 data (sales, consultant, etc.) D. Observer (I m here for the entertainment!) 4 2

3 Polling #2 In your opinion, what level of compliance / reporting burden is currently imposed on small plan filers? A. Low B. Medium C. High Form Changes IRS Compliance Questions instructions will tell you to SKIP! Again. 6 3

4 2016 Form Changes Schedules H / I Line 5c modified to require defined benefit plans to insert the My PAA confirmation number from the PBGC premium filing for the plan year Schedule SB Instructions for CSEC plans, reported in line 27, Code 1, have been updated Schedule MB Line 5 has been reorganized / renumbered 7 Schedules H / I, Line 5c Plans were not correctly identifying themselves as subject to PBGC. 8 4

5 Renumbering of items 5j through 5n of 2015 form; now lines 5i through 5m 9 Instructions for CSEC plans, reported in Line 27, code 1, have been updated to reflect guidance on certain issues relating to the application of CSEC Complete specific lines on Schedule SB 2016 Schedule SB, line 27 Actuarial Information for CSEC Plans attachment include as other attachment 10 5

6 Schedules MB / SB EFAST finding inconsistencies in signed Schedules MB / SB compared to submitted data Best practices for actuaries? 11 Polling #3 Do you (or does your actuary) verify the input presented on Schedule SB in the electronic file before the Form 5500 filing is submitted? A. YES, we have processes in place to ensure there are no changes to the Schedule SB as signed by the actuary B. NO, the actuary gives us signed filing and we submit C. The actuary inputs the Schedule SB directly into our Form 5500 software. D. Other or N/A 12 6

7 Modernization Proposal 13 Polling #4 Do you / your firm currently prepare Form 5500 filings for welfare benefit plans? A. YES B. NO C. N/A or Not Sure 14 7

8 Stunning! Requires all sizes health plans to file Form 5500 Potentially creates issues for small umbrella (or wrap) welfare plans Expected to result in nearly 2 million more Form 5500 filings! 15 New Schedule J See pages and of proposal [references are to proposal as originally posted on DOL website; total 777 pages!] Plan sponsor or health care consultant will likely have to complete Need to identify [if not reported on Schedule C] TPA/ASO provider; mental health benefits manager; substance use disorder benefits manager; pharmacy benefit manager; independent review organization; wellness program manager; stop loss limits, etc. 16 8

9 Polling #5 Would you / your firm see this as a potential new line of business? A. YES B. NO C. Don t know or N/A 17 Schedule A Some rearranging of the deck chairs, but generally collects same data as today. DOL continues to focus on investment products that are not today s norm No real improvement in the instructions Why is compensation threshold not the same as Schedule C ($1,000 / $,5000)? 18 9

10 Polling #6 Would you favor eliminating Schedule A to report investment contracts; instead, only welfare type benefits [including life insurance contracts in certain retirement plans] would be reported on Schedule A? A. YES B. MAYBE C. NO 19 Polling #7 With the implementation of the ERISA 408(b)(2) and the 404a-5 regulations, is additional reporting on the Schedule C necessary to improve information available to / needed by plan sponsors? A. YES B. NO C. MAYBE 20 10

11 Polling #8 Which disclosure do you find plan sponsors / plan administrators rely on or reference MOST? A. ERISA 408(b)(2) B. ERISA 404a-5 C. Schedule C 21 Fee Information Concept of eligible indirect compensation gone Proposal would require filers to report all types of compensation for ERISA 408(b)(2) covered service providers. All plans will attach copy of ERISA 404a-5 disclosure Small plans filing Form 5500 (instead of Form SF) must complete Schedule C 22 11

12 Multiple Schedule C?

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14 Schedule C Mapping 27 Polling #9 With regard to indirect compensation, is it more meaningful to present DOLLAR information or PERCENTAGE data? A. DOLLAR B. PERCENTAGE C. NOT SURE 28 14

15 Polling #10 Would the proposed Schedule C provide information that is MORE or LESS useful to plan sponsors than the ERISA 408(b)(2) and 404a-5? A. MORE B. LESS C. NEUTRAL filers don t focus on details of Schedule C D. Likely to cause more confusion 29 Small Plan Filers As proposed, the SF is not much of a short form! 11 [New] Specific Assets [Columns for (a) Beginning of Year (BOY) and (b) End of Year (EOY) Values] [New] 11a Cash/cash equivalents 11b [New] Securities, except employer securities, traded on a public exchange (1) Stock (2) Bonds (3) Other 11c [New breakout] Government securities issued by the United States or a State 11d [New] Interests in registered investment companies (Mutual funds, Unit Investment Trusts, Closed End Funds) 11e [New] Interests in insurance company pooled separate accounts (PSAs) 11f [New] Interests in insurance investment and annuity contracts (other than PSAs) 11g [New] Interests in bank common collective trusts (CCTs) 11h [New] Interests in bank investment contracts (other than CCTs) 11i [New] Participant loans 30 15

16 Polling #11 Do you think individual life insurance contracts in a retirement plan are eligible assets for purposes of Form 5500-SF? A. YES B. NO C. Undecided 31 14t [New] If this is an individual account plan, were there any checks to participants or beneficiaries that were uncashed as of the end of the plan year? [] Yes [] No. If Yes, complete 14t(1)-(4) (1) Enter number of uncashed checks (2) Enter total value of uncashed checks (3) Describe the procedures followed by the plan to verify a participant s or beneficiary s address before a check was mailed. (4) Describe the procedures followed by the plan to monitor uncashed checks, including steps to locate missing participants. 14s [New (based on 1998 Line 8a)] Is the plan s summary plan description (SPD), including any summary descriptions of modifications, in compliance with the content requirements in 29 CFR ? (See instructions.) [] Yes [] No 14n [New] Did the plan trust incur unrelated business taxable income (UBTI)? [] Yes [ ] No [] NA If Yes, enter amount. 14o [New] Did any employer or employer organization sponsoring the plan pay any of the administrative expenses of the plan that were not reported on Line 10g? [] Yes [] No 14p [New] Did any person who is disqualified under ERISA Section 411, serve or was permitted to serve the plan in any capacity? [] Yes [] No 14q [New] Did the plan sponsor or its affiliates provide any services to the plan in exchange for direct or indirect compensation? [] Yes [] No 32 16

17 18c [New] Name of Trustee/Custodian Check [] if custodian 18d [New] Trustee s or custodian s telephone number [New --intended to be electronic signature] Date and Signature of Trustee/Custodian SIGN HERE Signature of plan trustee or custodian: Enter Date: Enter name of individual signing as trustee or custodian 21 [New] If this is a defined benefit pension plan, does the plan comply with Code section 401(a)(26) participation requirements? [] Yes [] No 14r [New] Have any of the plan s service providers been terminated for a material failure to meet the terms of a service arrangement or failure to comply with Title I of ERISA, including the failure to provide required disclosures under 29 CFR b-2? [] Yes [] No If Yes, complete elements (1)-(7) to identify the service provider. (1) Name: (2) EIN: (3) Enter applicable service code from Line 2c(1) for describe services provided to plan: (4) Address: (5) Telephone: (6) Explanation of reason for termination: (7) [] Check if termination was due to failure to provide required disclosures under 29 CFR b [New] Were required minimum distributions made to 5% owners who have attained age 70 ½ (regardless of whether or not retired) as required under section 401(a)(9)(C)? [] Yes [] No [] N/A 25 [New] As of the last day of the plan year, has the plan ceased to permit contributions and prohibit entry by new participants? [] Yes [] No 33 Polling #12 How much additional compliance / reporting burden are your small plan filers willing to bear? A. SOME B. VERY LITTLE C. NONE 34 17

18 Polling #13 What influence do you this this proposal could have on the formation or continuation of small plans? A. Positive B. Negative C. Neither positive nor negative 35 Compliance Questions.intended to compel fiduciaries to evaluate plan compliance Requires stronger certifications for limited scope audit purposes Fair value certification; agent concept described But changes threshold to need an audit to number of participants with accounts at beginning of plan year 36 18

19 My Favorite Questions? Number of participants Using the participant-directed brokerage option Making catchup contributions Making sufficient deferrals to receive the maximum employer matching contribution How does this assist the Agencies in their enforcement roles? 37 Form 5500 Changes 38 19

20 Controlled Group Attachment 39 Participant Counts Participant Count Number of participants with account balances at beginning of year Number of participants with account balances at end of year Number of participants that made contributions during the year Number of participants that terminated employment during the plan year that had their entire account balance distributed as of the end of the plan year 40 20

21 New Data Collection 401(k) 41 4p [New] If you answered Yes, to Line 4n, enter the number of designated investment alternatives (DIAs) available under the plan and indicate the number of DIAs that are index funds. Also, check all that apply to indicate the types of DIAs available under the plan: [] Domestic Stock/Equity [] Bond/income [] Balanced/target allocation [] Money Market [] Target date/lifecycle [] International/Global Stock/Equity [] Sector/economy segment [] Other funds (Describe) 22a Were employees participating in the plan eligible to receive employer contributions even if they did not make any elective deferrals? [] Yes [] No If Yes, answer Line 22b. 22b Check the appropriate box to indicate how the employer s contribution is calculated and enter the percent or dollar amount or other formula: [] % of a participant s compensation (provide percentage) [] $ per participant (provide amount) [] Other (specify) 23a Does the plan provide for employer matching contributions contingent on employee elective deferrals? [] Yes [] No If Yes, answer Line 23b-d. 23b Check the appropriate box and enter the percentage, amount or formula to indicate the minimum elective deferrals necessary to qualify for an employer matching contribution (if there is no minimum, check other and enter none ): [] % of a participant s contribution up to a limit (provide percentage) [] $ per participant (provide amount) [] Other (specify) 42 21

22 24a Does the plan have automatic enrollment? [] Yes [] No If Yes, answer Lines 24b(1)-(3). 24b (1) Enter the default elective deferral as a percentage of a participant s compensation in the first year after a participant is automatically enrolled? (2) Does the plan have automatic escalation, assuming a participant has made no active elections? [] Yes [] No If Yes, enter the maximum elective deferral as a percentage of a participant s compensation. (3) Enter the number of participants that have not made any investment decisions and remain in the plan s default investment account(s): 2b [Current 2b(1)(E) with new breakouts] Interest on notes receivable from participants (participant loans) (1) Received in cash (2) Receivable in cash (3) Total. Add Lines 2b(1) and 2b(2). 2e [Current 2e] Benefit payment and payments to provide benefits: (1) Directly to participants or beneficiaries (A) [New breakout from current 2d(1)] Direct rollovers (B) [New] Hardship distributions made from a section 401(k) plan (C) [Current 2016 Line 4o] Distributions to employees who have attained age 62 and who were not separated from service when the distributions were made for a defined benefit plan or a money purchase pension plan 43 Polling #14 Would you favor having separate schedules for DB vs. DC plans to respond to compliance questions? A. YES B. MAYBE C. NO 44 22

23 Polling #15 At the preparation level, what s your estimate of how much your time associated with data collection and form preparation may increase? A. Up to 100% - time could double! B. Up to 50% more time C. No extra time 45 Financial Reporting Goal is to improve the reliability and transparency of plan investments and other financial transactions. Large plan filers with synthetics, master trusts, pooled separate accounts, collective trust funds and others require a lot more disclosures Trust companies/investment institutions will have substantial IT projects 46 23

24 Structured Attachments More data elements required Data will have more mineability Some items that were attachments to Schedule MB/SB moved onto the face of the schedule instead

25 Polling #16 Do you think it will be very difficult to get the additional information needed to complete the Line 4a delinquent contribution schedule? A. YES B. NO C. I may not be able to get all of the information

26 51 Polling #17 As a preparer, are you concerned about the volume of additional data collection and expertise needed if this proposal is implemented as is? A. YES B. MAYBE C. NO 52 26

27 More or Less? Schedule E mostly for leveraged ESOPs is back; moved other Schedule R questions so all ESOPs have to complete Schedule D reporting by plans is gone; only DFE filers complete Schedule D but now have to include values at end of reporting year New rules may cause more CCT/PSA providers to consider whether to file as DFEs 53 Actuary Signature May sign electronically under proposal May continue current method involving attachment of copy of signed Schedule MB/SB EFAST2 mentions that some filings aren t matching

28 Polling #18 In your opinion, will the proposed changes generally result in a plan sponsor/plan administrator having a better understanding of how their plan operates? A. YES B. NO 55 The Good (?) News DOL doesn t have funding to implement these changes A 2019 effective date would be impossible at this point. You can plan your retirement/career change to avoid this! 56 28

29 Thank you! 57 29