Department of Labor Announces Final Form 5500 Changes

The changes to Form 5500 for defined contribution and defined benefit plans are modest.

Defined contribution group plans must wait at least another annual filing cycle to submit a single Form 5500 for their collection of plans.

Each year the Department of Labor updates IRS Form 5500 to recognize legislative and regulatory changes. Every defined contribution and pension plan sponsor is required to file a Form 5500 annually to the IRS and DOL. The form contains information about a plan’s financial condition, investments and operation.   

The DOL final rule on changes for 2022 is most significant for defined benefit plans. Regulators “punted” on defined contribution issues, explains Michael Kreps, principal at Groom Law Group. “All the big stuff and really important questions that were out there were punted to a future rulemaking,” he says.   

The regulator made some technical changes to the Form 5500 pension plan funding schedules SB, filed by single-employer defined benefit plans, and MB, filed by multiemployer defined benefit plans, as well as some money purchase plans. Pension plan funding schedules include technical data about whether the plan has enough funds to pay promised benefits and complies with pension funding rules under federal law.

Although the DOL did not release final rules for DC plans, the regulator did make some changes for plan sponsors.

The 2019 Setting Every Community Up for Retirement Enhancement Act permitted the DOL to create pooled employer plans and multiple employer plans—which allow more than one employer to participate in a single retirement plan—to broaden workers’ access to employer-sponsored retirement plans. Proposed rules anticipated that defined contribution group plans with the same investments and trustee could file a consolidated Form 5500, beginning with the 2022 plan year.

“The big issue that folks were focused on was DOL defined contribution groups of plans—the idea under the SECURE Act that similarly situated plans would have the opportunity to file a consolidated 5500. And they just didn’t do that,” Kreps says.

MEPs and PEPs allow several employers to participate in a single retirement plan, while defined contribution groups are meant to allow more than one employer, each with their own defined contribution plan, to file a single Form 5500 for the collection of plans, under conditions.

In 2021, the DOL’s Employee Benefits Security Administration joined the IRS and Pension Benefit Guaranty Corporation in requesting public comments on proposed revisions to the Form 5500 annual return/report. EBSA also published a notice of proposed changes to the implementing regulations under the Employee Retirement Income Security Act.

The DOL proposal to implement defined contribution group plans added requirements that were not in the statute—notably, that plans must also share a trust, which must submit to regulator audits.

“We’ve been waiting for final rules on that piece for a while and have not yet gotten them,” Kreps adds.

Bill Ryan, partner and head of defined contribution solutions at NEPC, says the DOL is approaching the final rules for defined contribution plans deliberately. He was not surprised that final rules for defined contribution groups were not released.

“What the DOL did was listen to the public comments and realized maybe there’s more to unpack before concluding,” he says. “That was a positive thing, for everyone, just to understand how the market is developing around us.”

The DOL, however, did make some changes to the Form 5500 for defined contribution plans. The regulator added specific codes corresponding to plan types, he explains.

“Changes on the defined contribution side [are] mostly clarifications between plan types, when it comes to MEPs and PEPs,” Ryan says. “They just added codes to the Form [5500] to be more specific on distinguishing if you’re a multi[ple] employer plan or if you’re a pooled employer plan. It’s more of a coding for identification purposes.”

The codes will allow regulators to track and study PEPs, MEPs and group plans and study the market as it develops, Ryan says.  

 “This was just to get more clarity and better data on who’s using what types of plans in the system,” Ryan says.