Be Prepared for the New Form 5500--More Sponsor Involvement Will Be Required

There is a big change coming and plan sponsors need to be ready. When ERISA was passed it included a requirement that those who sponsor ERISA regulated plans must file a form, the Form 5500, with the government containing plan related information. Since its initial inception, the Department of Labor and the Internal Revenue Service, who have joint jurisdiction in this area, have periodically revised the Form 5500. The most recent revision was announced in November of 2007 and is effective for the 2009 plan year. For calendar year plan years this means that the Form 5500 for 2009 must be filed by July 31, 2010 unless there is an extension.

The changes announced in November 2007 included changes both in content and the way the Form 5500 is to be filed. The most significant content changes relate to service provider compensation on Schedule C. These changes were addressed in a Webinar sponsored by PSCA, the Securities Industry and Financial Markers Association (SIFMA) and US Chamber of Commerce on January 12. You can link to the webinar PowerPoint from PSCA’s website www.psca.org. However, another big change is not with the content but with the gathering of the information necessary to complete the Form. It will now be difficult for recordkeepers and TPAs to prepare a signature-ready Form 5500 without more input from sponsors. Sponsors should be prepared to be more involved during the preparation process.

The other significant change requires that the Form 5500 be filed electronically. From early tests it appears that the new filing system will work and that sponsors will be able to rely on their recordkeepers and TPAs to submit the report using the new approach.

Nevertheless, as both the content and filing changes will result in processes very different from the past, it is important than sponsors contact their recordkeepers and TPAs soon to discuss the Form 5500 filing process with them. Sponsors should also be prepared to receive required information from all of their providers beginning in March and April. It is important that sponsors retain all of received information as this information will be necessary to complete the Form 5500, and it may be provided only to sponsors and not their recordkeepers or TPAs without sponsor involvement.

David