(b)lines Ask the Experts – Managing Form 5500 Filing for Multiple Plans

August 5, 2014 (PLANSPONSOR (b)lines) – “I work for a large nonprofit hospital, and through a series of acquisitions we have ended up administrating a variety of 401(a), 401(k) and 403(b) plans (more than 10), some of which are a) frozen, b) have very few participants, or c) both.

“It has created an overwhelming amount of Form 5500 filings (readily apparent to me this time of year as I am making certain that extensions have been filed for each plan as I write this), in addition to other reporting and disclosure requirements, as well as other administrative work. Is there anything I can do to reduce the burden?”  

Michael A. Webb, vice president, Cammack Retirement Group, answers:

Excellent question, and, given the current climate of mergers and acquisitions in health care, a question to which I am certain a number of our readers can relate! There are a variety of solutions to these issues, dependent upon factors such as plan size and type, plan features, and whether the plan is frozen or active, and how long the plan has been frozen or active.

The best first step is to develop a retirement plan organizational chart of each member of your current controlled group in a separate box. In each box, indicate whether or not the entity sponsors  a retirement plan; if yes, list the plan (or plans) by type (e.g. 401(a), 401(k), 403(b), 457(b)/(f), etc.), name of plan recordkeeper (or recordkeepers), plan contribution formula, whether or not the plan is subject to the Employee Retirement Income Security Act (ERISA) (if applicable), whether the plan is active or frozen and, if the latter, when the plan was frozen to new contributions. This may sound basic, but the Experts have encountered  situations in which an administrative staff of the plan sponsor discovered plans (457(b) and 457(f) plans in particular) about which they were previously unaware.

The next step is to confirm that EXECUTED copies of all plan documentation for each plan exists, along with a copy of the most recent filed Form 5500 for the plan (if subject to ERISA). Again, this may sound simplistic, but completed documents that a plan sponsor neglected to sign are not uncommon.

Next, make all of this information available to benefits counsel well-versed in retirement plans of nonprofits, and pose the following question: “How can I simplify the administrative burden posed by sponsoring such a large number of plans?”

Counsel will then likely propose several solutions in response to this question, including, but not limited to, the following:

  • Merging and/or terminating plans. Note that only plans of the same type (e.g. 403(b)) can be merged;
  • Confirming that plans with less than 100 participants are being filed as small plans for Form 5500 purposes (which eliminates such administrative burdens as a plan audit), and what steps can be taken, if any, to reduce the number of participants of plans that are on the threshold of being a small plan; and
  • Confirming that 403(b) plans are taking full advantage of certain grandfathering provisions that allow for certain contracts not to be considered to be part of the plan for purposes of the Code or certain sections of ERISA (the latter which may be able to reduce the number of plan participants for purposes of the previously mentioned solution above).


Once appropriate action has been taken in this regard, a plan sponsor may also wish to look at the number of recordkeepers it utilizes, and perhaps issue a request for proposals (RFP) to consolidate the number of recordkeepers to as few as one, since, in addition to reducing administrative burdens, the purchasing power of the retirement plan assets of the entity can be improved. However, such a process generally does not take place until after any plan merger/termination issues have been addressed, since plan sponsors that sponsor fewer retirement plans are generally more attractive to potential recordkeepers than those that sponsor a greater number of plans.

Good luck!


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.