New Form 5500 Questions Coming

The IRS is adding some new questions to the 5500 Form, which is the tax return for a retirement plan.

The additional compliance information that will be gathered includes items such as:

  • Trustee name and phone number,
  • Whether the plan is a 401(k) plan,
  • Whether the plan is Safe Harbor or uses the ADP/ACP Test,
  • If the ADP/ACP Test is used, whether the current year testing method is used,
  • Whether coverage testing is satisfied by the ratio percentage test or the average benefits test,
  • Whether permissive aggregation with other plans is used to satisfy coverage and nondiscrimination testing,
  • Whether the plan has been timely amended for all tax law changes,
  • Dates and other information related to the most recent plan amendment or restatement,
  • Opinion or Advisory Letter information for adopters of pre-approved master and prototype documents or volume submitter plans OR determination letter information for plans that are individually designed,
  • Whether the plan is maintained in a U.S. territory,
  • If the plan had unrelated business taxable income and the amount, and
  • Whether in-service distributions were made during the plan year and the amount.

This could be tricky business because not all the answers have clear cut answers. (What else is new with retirement plans, right?) I mean, has the plan been timely amended for all tax law changes -- meaning in its entire history of operation or the recent ones? Yikes.

On the flip side, perhaps the new round of questions and information requests will assist in having better data to pull from when legislators go hunting. It all remains to be seen! Impact to you: be aware and make sure your administrator assists with the answers.