These Phase III revisions implement certain elements of a September 2021 regulatory proposal, which included proposed changes to annual reporting requirements under the Employee Retirement Income Security Act of 1974 (ERISA). Some of the changes relate to the Setting Every Community Up for Retirement Enforcement Act (SECURE Act), including items affecting multiple-employer plans (MEPs) and defined contribution group reporting arrangements. As such, the changes mostly impact retirement plans. Phase III revisions are effective for plan years beginning January 1, 2023, with filing beginning in July 2024. The previous Phases I and II adopted changes for plan years 2021 and 2022, respectively.

Some of the Phase III changes include:

• Consolidated reporting option for certain groups of defined contribution plans. A group may file one Form 5500 with an individual schedule attached for each plan.
• New method for counting participants in defined contribution plans. Previously, all employees eligible to participate in the plan were counted. Under the new rule, plans need only include participants or beneficiaries with account balances at the start of the plan year. This change is expected to result in expanded availability of simplified reporting for small plans, which are typically plans with fewer than 100 participants.
• An updated Schedule H (Financial Information), which includes a breakout of reporting on administrative expenses paid by the plan.
• New Schedule MEP (Multi-Employer Pension Plan Information) and additional items applicable to MEPs have been added to Form 5500.
• New IRS compliance questions intended to improve tax oversight and compliance of qualified retirement plans. Questions address several topics including nondiscrimination testing, safe harbor status, and use of pre-approved plan documents.
• Further improvements in financial and funding reporting by PBGC-covered defined benefit plans.
• Technical and conforming changes as part of the annual rollover of forms and instructions.

Impact

The revisions are expected to save employee benefit plans an estimated $95 million annually in filing costs. In addition, “The form changes and regulatory amendments, especially those on multiple-employer plan reporting, improve the Form 5500 as a critical oversight, public disclosure and policy data tool,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez.

Although Phase III has been described as the final round of revisions to Forms 5500 and 5500-SF, certain elements of the September 2021 proposal are being deferred for further consideration and could be implemented at a later date.

For additional information, the DOL’s Fact Sheet regarding changes to Forms 5500 and 5500-SF can be found here.