Finance News & Insights

Feds’ 2017 Form 5500 aims to make life easier for employers

Finance chiefs may be pleasantly surprised with the latest version of the DOL’s Form 5500.

That’s because the agency some efforts to address employers’ concerns with just released 2017 Form 5500 series.

Remember, the series – which includes Form 5500-SF, Schedules, and Instructions – is for information purposes only. With very limited exceptions, plans must file Form 5500s electronically.

Still, the DOL’s new Form 5500 series can give employers an invaluable peak at the changes in this year’s filing process.

4 key changes

Here are the main changes:

1. Confusing IRS questions axed. Several years ago, Form 5500 added questions about a number of IRS requirements, covering paid preparer information, trust info and retirement plan compliance.

These questions caused plenty of confusion for employers – and for good reason.

Not long after the questions were added, the feds said they were optional and should be skipped. To end the confusion about the questions, the DOL has removed them altogether from the 2017 form.

2. Addition to Line 4 of Form 5500 and 5500-SF. This line asks filers about any info that may have changed since the last filing – plan sponsor name, employer identification number (EIN), etc. This year, the line asks about plan name changes.

3. Missing individuals and required minimum distributions (RMDs). Another favorable change for employers is included on the Instructions part of Schedules H and I.

For 2017, plans don’t have to report unpaid retirement plan RMDs for participants or beneficiaries that can’t be located after reasonable efforts have been made. The IRS rolled out audit guidelines on reasonable efforts to locate missing individuals for RMDs recently. You can find those guidelines here.

4. Small plan filing exemption clarity. The instructions now clarify that small unfunded, insured or combination welfare plans won’t qualify for the small plan filing exemption if they’re subject to Form M-1 filing requirements.

In general, multiple employer welfare plans (MEWAs) are subject to M-1 filing. The rule prohibiting these plans from qualifying for the exemption has been around since 2013. But this is the first year it’s addressed in the instructions.

New penalty, proposed changes

The instructions also remind employers that the current maximum penalty for filing failures ($2,097 per day) is set to increase in January.

Finally, on top of these minor tweaks, more significant changes to Form 5500 have been proposed. So employers will want to keep an eye out for any additional DOL updates.

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