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DOL FAB 2019-01 Provides Form 5500 Transition Relief for MEPs
Practical Law Legal Update w-021-4737 (Approx. 4 pages)
DOL FAB 2019-01 Provides Form 5500 Transition Relief for MEPs
by Practical Law Employee Benefits & Executive Compensation
| Published on 25 Jul 2019 • USA (National/Federal) |
The Department of Labor (DOL) issued Field Assistance Bulletin 2019-01, which provides transition relief to multiple employer plans (MEPs) that have not provided a list of participating employers in the Form 5500 annual reports.
On July 24, 2019, the DOL issued Field Assistance Bulletin 2019-01, which provides temporary penalty relief for plans that have failed to comply with the Form 5500 reporting requirements for multiple employer plans (MEPs) under ERISA Section 103(g) (to learn more about the Form 5500 requirements, see Practice Note, Audit By Independent Qualified Public Accountant for Qualified Retirement Plans: Form 5000; to learn more about MEPs, see Practice Note, Controlled Group and Affiliated Service Group Rules: Multiple Employer Plans).
Background
Under ERISA Section 103(g), a MEP is required to submit with its Form 5500 filing:
- A list of participating employers in the MEP.
- A good faith estimate of the percentage of total contributions made by the participating employers during the plan year.
This rule became effective for plan years beginning after December 31, 2013.
In November 2014, the DOL issued an interim final rule (IFR) that implemented ERISA Section 103(g) (79 Fed. Reg. 66617 (Nov. 10, 2014)). The IFR added instructions to the Form 5500 that require the annual report to include:
- A complete and accurate listing of each participating employer in the plan during the plan year, identified by name and employer identification number (EIN).
- A good faith estimate of each employer's percentage of the total contributions, including employer and participant contributions, made by all participating employers during the year.
Transition Relief
The DOL recently reviewed Form 5500 data and found that some MEPs, including those sponsored by professional employer organizations (PEOs), have not properly included a list of participating employers with the Form 5500. For example, the DOL found that 185 MEP filings for the 2016 plan year were compliant and 101 MEP filings in the same plan year were non-compliant. Due to the possibility that some plan fiduciaries misunderstood the annual filing requirement, the DOL is providing transition relief as follows.
Special Extension of July 31, 2019 Filing Deadline
The FAB addresses the upcoming July 31, 2019, filing deadline for Form 5500 and Form 5500-SF for calendar year plans. The DOL is granting MEPs a special filing extension of up to two and a half months to file a 2018 annual report that is in compliance with ERISA Section 103(g). MEPs seeking this extension should:
- Check the "special extension" box under Part I, Line D on the 2018 Form 5500 or 5500-SF.
- Enter "FAB 2019-01" as the description.
MEPs using this special extension do not need to file a Form 5558 with the IRS.
MEPs that already filed their 2018 Form 5500 or 5500-SF may still receive the transition relief offered by FAB 2019-01 by filing an amended annual report that complies with ERISA Section 103(g) by October 15, 2019.
Relief for Plan Years Before 2018
The FAB provides transition relief to MEPs that have failed to file a complete and accurate list of participating employers with their Form 5500 for the 2017 plan year and earlier.
As part of this transition relief, the DOL will not reject a Form 5500 or Form 5500-SF filed on behalf of a MEP for the 2017 or any prior plan years, or seek to assess civil penalties against the plan administrator under ERISA Section 502(c)(2) (29 U.S.C. § 1132(c)(2)) with respect to those filings, solely because the administrator of the MEP failed to include complete and accurate participating employer information under ERISA Section 103(g).
To obtain this transition relief, the annual reports filed for the MEP for the 2018 and following plan years must comply with ERISA Section 103(g), the Form 5500 or Form 5500-SF, and the accompanying instructions, by including the two types of information required by the 2014 IFR in the required format.
The DOL may also condition this transition relief on whether a MEP provides, on request, employer information for previous years in which the plan's administrator failed to provide employer information in the annual report.
Practical Impact
Administrators and sponsors of MEPs should note the transition relief provided in FAB 2019-01. In particular, MEPs preparing to file the Form 5500 or 5500-SF by July 31, 2019, should review the special filing extension. MEPs also should carefully review the annual reports they have filed with the DOL since the 2014 plan year to determine if they failed to comply with ERISA Section 103(g). If so, they should consider availing themselves of the transition relief outlined in the FAB.