U.S. Department of Labor Announces Changes to Form 5500

On February 23, 2023, the U.S. Department of Labor announced changes to Form 5500, Annual Return/Report of Employee Benefit Plan, and Form 5500-SF, Short Form Annual Return/Report of Employee Benefit Plan. These changes are effective for plan years beginning on or after January 1, 2023. The significant updates, which largely reflect provisions in the SECURE Act of 2019 (Setting Every Community Up for Retirement Enhancement), consist of the following:

• A consolidated Form 5500 reporting option for groups of defined contribution retirement plans  – the new Defined Contribution Group (DCG) arrangement provides a new Schedule DCG (Individual Plan Information) and will generally be required to comply with Form 5500 requirements for large pension plans
•  Improved reporting for Multi-Employer Plans by establishing Pooled Employer Plans (PEPs) as a new type of retirement plan and creating a new Schedule MEP (Multiple-Employer Retirement Plan Information)
• A revised participant-counting methodology to determine the 100-participant threshold for small plans, including a conditional waiver of the annual audit performed by an Independent Qualified Public Accountant (IQPA). The new approach is based on the number of participants with account balances rather than including individuals eligible to participate even when they do not elect to participate
• Additional breakout categories for administrative expenses paid by the plan on Schedule H of the Form 5500 to improve fee and expense transparency
• Continued improvements to financial and funding reporting by Pension Benefit Guaranty Corporation – covered defined benefit plans including changes to Schedule R (Pension Plan Information) and Schedules SB and MB (Actuarial Information)
• Additional Internal Revenue Code compliance questions to improve tax oversight and compliance of tax-qualified retirement plans, including plans in a DCG filing
• Technical and conforming changes as part of the annual rollover of forms and instructions

Form 5500 is due by the end of the seventh month following the end of the plan year (July 31 for calendar-year filers), with a 2 ½-month extension available. The revisions to Form 5500 will be applicable for returns filed beginning in 2024. A draft version of the return showcasing these changes is not yet available.

If you have any questions about the recent changes to Form 5500 reporting requirements and its impact on your organization, please reach out to J. Calvin Marks, Principal, or Brian Donaldson, Senior Tax Associate.