The Pension consultants at Planmark regularly receive calls on a broad array of technical topics related to qualified retirement plans. A recent call with a CPA in Carrollton about compliance questions on FORM 5500. The CPA asked:
“What are the new compliance questions the IRS is asking on Form 5500 and when do they apply?”
The DOL and IRS added new, probing compliance questions to the 2015 Forms 5500/5500-SF and Schedules H, I and R. However, the IRS recently declared plan sponsors should not complete these questions for the 2015 filing. At first, the IRS said the new inquires would be “optional” for 2015, but in February 2016, the IRS backed down on that for this year.
It is likely, however, that the questions will be required for 2016 Form 5500 filings.
The new compliance questions cover the following:
Is the plan an Internal Revenue Code Section (IRC §) 401(k) plan?
How did the plan satisfy the actual deferral percentage and actual contribution percentage nondiscrimination tests?
How did the plan satisfy the minimum coverage requirements of IRC §410(b)?
Has the plan been amended for all required tax law changes?
What type of document is the plan based on (master and prototype, volume submitter or individually designed)?
What is the date of the plan’s most recent favorable approval letter?
Did the employer maintain an employee stock ownership plan and how were dividends managed?
What contribution amount was deducted? By how much did the contribution exceed the deduction limit?
Did the plan trust incur unrelated business taxable income?
Were in-service distributions made during the plan year?
The DOL and IRS plan to zero in on key plan compliance requirements for plans through the addition of revealing questions on Form 5500 filings. Plan sponsors and service providers get a “pass” for 2015, but should anticipate that the questions will apply to 2016 filings.
The Resource Desk is staffed by the pension experts at Planmark Financial Group, Inc.,
a third-party plan administration firm. Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Planmark does not provide tax or legal advice.
Consumers consult with their tax advisor or attorney regarding their specific situation.