DOL Offers Relief to MEPs That Did Not File Correct Form 5500s

The Department of Labor (DOL) found more than 100 multiple employer plans (MEPs) in violation of a requirement to include on the Form 5500 a list of participating employers and a good faith estimate of the percentage of total contributions made by such participating employers during the plan year.

The Department of Labor (DOL) issued Field Assistance Bulletin 2019-01, which provides guidance and temporary penalty relief related to certain Form 5500 Annual Return/Report requirements for multiple employer plans (MEPs).

In 2014, as part of the Cooperative and Small Employer Charity Pension Flexibility Act (CSEC Act), Congress added Section 103(g) to the Employee Retirement Income Security Act (ERISA). The new section required MEPs to “include a list of participating employers and a good faith estimate of the percentage of total contributions made by such participating employers during the plan year.”

During a review of Form 5500 data in 2018, the DOL identified 185 MEP filings for the 2016 plan year as being compliant and 101 MEP filings as non-compliant. Examples of non-compliant filings included forms in which: (1) the filer replaced employer names with either abbreviated names or initials, client numbers, or other labels such as “Client 1;” (2) the filing reported only the last 4 digits of employer identification numbers; (3) the filing included an attachment with no information and a note “Details available upon request;” and (4) the filing incorrectly listed a professional employer organization (PEO) as the only participating employer.

In discussions with the National Association of Professional Employer Organizations (NAPEO), the PEOs and their representatives raised a number of objections to the ERISA Section 103(g) filing requirement.  They contended that filing the participating employer list imposes material costs and burdens on PEO-sponsored plans, and they argued that making the employer list public was not in the best interest of plan participants and beneficiaries. The DOL received and considered similar objections in connection with the Paperwork Reduction Act (PRA) notice associated with the publication of the interim final rule implementing the CSEC Act requirement.

The DOL says it continues to believe that the reporting requirements made effective for MEPs by the 2014 interim final rule implementing ERISA Section 103(g) are a reasonable and appropriate way to implement Congress’ directive in the CSEC Act. It does not believe it has the authority under ERISA Section 110 or ERISA Section 104, when read together with ERISA Section 106, to treat information otherwise required to be filed with or as part of a plan’s annual report as confidential or nonpublic information.

So, in light of the possibility that some plan fiduciaries may have misunderstood the annual reporting requirement, the DOL now says it will not reject a Form 5500 or Form 5500-SF filed on behalf of a MEP for the 2017 plan year, or any prior plan year, or seek to assess civil penalties against the plan administrator under ERISA Section 502(c)(2) with respect to such filings, solely on the basis that the plan administrator failed to include complete and accurate participating employer information in accordance with ERISA Section 103(g). The DOL is granting this relief provided that the annual reports filed for the plan for the 2018 and following plan years comply with the requirement in ERISA Section 103(g).

Also, in light of the July 31, 2019, due date for calendar year plans to file their 2018 Form 5500 or Form 5500-SF, the Department is granting MEPs a special filing extension of up to 2½ months to file their 2018 annual report in compliance with ERISA Section 103(g). MEPs should check the “special extension” box under Part I, Line D on the 2018 Form 5500/5500-SF and enter “FAB 2019-01” as the description to use this extension. MEPs using this special extension do not need to file a Form 5558 with the IRS.

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