If you sponsor a calendar year retirement plan, you are likely in the process of completing your Form 5500 for the 2014 plan year. Thus, it seems like a good time to let you know that, unfortunately, new information may be required next year on your Form 5500.
The Internal Revenue Service (IRS) has proposed a new Form 5500-SUP for the 2015 plan year. SUP stands for “supplemental information.” Essentially, the IRS is adding some new questions to the annual filing to gather certain plan compliance information.
Each year, the U.S. Department of Labor (DOL) uses the information on Form 5500 to identify plans for further questioning and auditing. With the addition of these new questions proposed by the IRS, the IRS will have a similar ability to use the Form 5500 responses to target plans for IRS examination or perhaps a compliance questionnaire. As a result, it’s crucial to answer all Form 5500 questions, including these new questions, with care.
Some of the new information that may be required is pretty basic, such as the name of the trust, the trust identification number, and the name and telephone number of the trustee or custodian.
But other items will require more effort to answer. These items include:
• How does the plan satisfy nondiscrimination testing and coverage testing?
• Which testing method is used for the actual deferral percentage (ADP)/actual contribution percentage (ACP) test?
• Has the plan been amended in time for all tax law changes?
• What is the date of the last amendment/restatement?
• What is the date of the IRS opinion or advisory letter (for preapproved plans) or favorable determination letter (for individually designed plans)?
• Is the plan maintained in a U.S. territory?
• Did the plan trust incur unrelated business taxable income?
• Were in-service distributions made during the plan year and, if so, what was the amount?
Most employers will be able to answer these new IRS questions electronically on Form 5500 and 5500-SF. Plan sponsors that do not file electronically will need to use the paper Form 5500-SUP.
Although these questions are still in proposed form, as you administer your retirement plan through the 2015 plan year, you will want to keep in mind that you may need to be prepared to answer these new questions next year.