If you file the Form 5500, you know what an odious exercise that can be. And you’d better get it right. Not only is the Department of Labor’s Employee Benefits Security Administration (EBSA) examining the form you file — so is the IRS.
The DOL wants the forms to be complete and accurate, of course, but EBSA primarily wants to know that you filed the form and wants the information you provided about your plans. But the IRS’ interest is not quite the same as EBSA’s. IRS Director of Employee Plans Examinations Monika Templeman said in the IRS’ Employee Plans News that the IRS Employee Plans Compliance Unit (EPCU) is actively reviewing Form 5500 compliance itself.
Templeman said that one EPCU project is to examine Forms 5500 that were filed but show no plan participants, even though the plan had received employer contributions. The IRS is sending compliance check letters to sponsors of plans making such reports. She said that the IRS wants to know two things:
1) whether the report is accurate; and
2) if the report is accurate, why the plan has no participants but still has assets and still receives contributions.
The EPCU also has undertaken the Form 5500 Non-filer Project, in which it contacts plan sponsors if their latest Form 5500 return was not marked “final” and they have not filed a subsequent return. The EPCU began the project by selecting returns that were due for the plan year ending Jan. 31, 2010 (originally due Aug. 31 if the plan had not filed for an extension) and that still had not filed by February 2011.
Templeman said the EPCU has discovered ignorance of how to file. The EPCU found that some filers don’t know where to file the Form 5500-EZ. And not everyone is aware that now it is mandatory to file Form 5500 electronically through EFAST2.
The EPCU so far has closed more than 150 cases through the Form 5500 Non-Filer Project, and in 32 percent of those closed cases a return ended up being filed.
So remember that it’s not enough to simply file the Form 5500 and not enough even to be accurate and complete with the information you report! You also have to pay attention to finer details, or risk scrutiny from the Feds.