2023 Form 5500 Changes.
EFAST2 website credentials are changing to Login.gov. This does not change EFAST2 signature credentials. Website authentication will be changing from User ID and Password to MultiFactor Authentication (MFA)
EFAST2 Internet Registration (IREG) is used for website authentication and signature credentials. Beginning January 1, 2023, all new EFAST2 website accounts will be created using the Login.gov process. Existing filers may use their EFAST2-issued UserID and password to log in to the EFAST2 website until December 31, 2023. However, existing filers may change to using a Login.gov account as early as January 1, 2023. This 8-month grace period provides a gradual transition.
You must log in to the EFAST2 website to obtain new electronic signature credentials for the Form 5500 Series, to file the Form PR, and to use the Form 5500 Series filing application (IFILE). Existing Form 5500 series filers using approved private software generally do not need to log in to the EFAST2 website.
New EFAST2 users will be directed right away for MFA. “Forgot password” users will be asked for MFA information at that time.
Accepted forms during 2023: 2020, 2021, 2022 Forms prior to 2020 can no longer longer be used except for certain e used except for certain prior year schedules.
Beginning January 1, 2023: filings with a plan year begin date in 2023 must be submitted on a 2022 Form 5500, 5500-SF, or 5500-EZ.
There are new plan characteristics codes to identify different types of multiple-employer defined contribution plans filing the Form 5500 (pooled employer plans, association retirement plans, PEO multiple-employer plans, and other multiple-employer plans) ave been added for Form 5500, line 8.
2U - Multiple-employer pension plan sponsored by a bona fide group or association of employers that is an Association Retirement Plan that meets all the conditions under 29 CFR 2510.3-55(b).
2V - Multiple-employer pension plan that is a Professional Employer Organization Plan (PEO Plan) that meets all the conditions under 29 CFR 2510.3-55(c).
2W - Multiple-employer pension plan that is a pooled employer plan (PEP) that meets the definition under ERISA section 3(43).
2X - Multiple-employer defined contribution pension plan that does not fall under characteristic code 2U, 2V or 2W.
Part V, Line 13 (for multiemployer defined benefit plans) has been revised to require plans to report identifying information about any participating employer who either:
(1) contributed more than 5% of the plan’s total contributions, or
(2) was one of the top-ten highest contributors.
Effective January 1, 2022, the EFAST2 System will only accept 2019, 2020 and 2021 forms. Therefore, if an earlier plan year filing needs be submitted (for an amended filing or a first-time late filing) the prior to 2019 form needs to be prepared on the most current available form which right now is a 2021 Form 5500.
Effective for 2020 plan year filings, a Form 5500-SF can no longer be submitted for one-participant and foreign plans. These filings must be prepared and submitted on a Form 5500-EZ. An exception to this for an amended filing that was previously submitted on a Form 5500-SF, must be amended on a Form 5500-SF.
The Form 5500-EZ will be accepted through the EFAST2 System beginning with 2020 plan years. A filer must file the Form 5500-EZ electronically using the EFAST2 Filing System instead of filing a paper Form 5500-EZ with the IRS if the filer is required to file at least 250 returns of any type with the IRS, including information returns. IRS returns include Forms W-2 and Forms 1099, income tax returns, employment tax returns, and excise tax returns, for each calendar year.
Multiple-employer defined contribution pension plans now are required to report the aggregate account balance information by the employer in a new element #4 on the existing Form 5500 multiple-employer attachments.
Multiple-Employer Plan Participating Employer Information
(Insert Name of Plan and EIN/PN as shown on the Form 5500)
The Form 5500 instructions have been revised to clarify that a pooled employer plan (PEP) is a multiple-employer plan that files a single Form 5500 for a 401(k) Plan that allows unrelated businesses to participate in one plan managed by a pooled plan provider (PPP). Each pooled employer plan must complete a new, non-standard ‘‘Pooled Employer Plan Information’’ attachment to indicate that the pooled plan provider (PPP) administering the plan complied with the Form PR filing requirements. The attachment may be attached as part of the ‘‘Multiple-Employer Plan Participating Employer Information’’ attachment or as a separate attachment entitled ‘‘Pooled Employer Plan Information.’’ See example below.
In addition, pooled employer plans must either on a separate attachment or as part of the participating employer attachment for multiple- employer plans, answer whether the pooled plan provider (PPP) administering the plan has complied with the Form PR filing requirements. If the answer is “yes,” the most recent Ack Id number from the Form PR filing’s submission must be provided. The AckID is the acknowledgement code generated by the system in response to a completed Form PR being submitted. The instructions to the Form PR advise the pooled plan provider that it must keep, under ERISA section 107, the electronic receipt for the Form PR filing as part of the records of the pooled employer plans operated.
(Insert Name of Plan and EIN/PN as shown on the Form 5500)
1. Name of participating employer 2. EIN 3. % of Total Contributions for Plan Year. 4. Aggregate Acct. Bal. at End of Yr. Attributable to each Participating ER
Only pooled employer plans complete.
1a. Is the pooled plan provider currently in compliance with the requirements for filing the Form PR (Pooled Plan Provider Registration Statement)? (See Form PR Instructions and 29 CFR 2510.3-44.) [ ] Yes [ ] No
1b. If “Yes” is checked in line 1a, enter the AckID for the most recent Form PR that was required to be filed under the Form PR filing requirements. (Failure to enter a valid AckID will subject the Form 5500 filing to rejection as incomplete.)
AckID ______________________
The 2021 Form 5500 has a new Checkbox E, Part I for a plan sponsor to indicate they adopted the plan in the 2021 plan year and treated the plan as being adopted and effective in the 2020 plan year pursuant to SECURE Act section 201. For defined benefit plans in this category, the 2021 instructions provide information about how to report data regarding 2020 funding requirements (i.e., Schedule SB data).
The DOL late fees have been updated to reflect an increase to $2,400 per day for failure to file a Form 5500. This is the maximum civil penalty amount assessable under Employee Retirement Income Security Act (ERISA) Section 502(c)(2), as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The increased penalty under ERISA Section 502(c)(2) is applicable for civil penalties assessed after January 15, 2022, whose associated violation(s) occurred after November 2, 2015. [29 C.F.R. §2575.1-3]
Originally effective for audited financial statements after December 15, 2020, the “limited scope audit” was replaced with the “ERISA Section 103(a)(3)(C) audit” to reflect SAS 136. SAS 136 permits the Accountant’s Opinion to issue a form of an unmodified opinion when the audit was performed pursuant to 29 CFR 2520.103-8 and/or 29 CFR 2520.103-12. However, this was delayed until audited financial statements ending after December 15, 2021 (e.g., 2021 calendar year plans) but could have been implemented early. The Schedule H, Line 3b, instead of being a “yes”/”no” question, now has check boxes to indicate the type of Accountant’s Opinion that was performed.
In addition, part of the new auditing requirements is for the auditor to obtain and review a full Form 5500 filing before the audit and auditor’s opinion can be finalized.
Since the SECURE Act increased the required minimum distribution age from 70-1/2 to 72, the instructions have been revised to indicate this change.
Multiple employer welfare plans that are exempt under 29 C.F.R. Section 2520.104-20 or 29 C.F.R. Section 2520.104-44 from the requirement to include financial statements with the annual report are required to include this attachment but report only a list of the participating employers and the EIN in elements (1) and (2). Elements (3) and (4) are left blank. This would be plans that are unfunded, fully insured or a combination of unfunded/insured.
Pooled Employer Plans (PEP):
The Form 5500 instructions have been revised to clarify that a pooled employer plan (PEP) is a multiple-employer plan that files a single Form 5500 for a 401(k) Plan that allows unrelated businesses to participate in one plan managed by a pooled plan provider (PPP). Each pooled employer plan must complete a new, non-standard ‘‘Pooled Employer Plan Information’’ attachment to indicate that the pooled plan provider (PPP) administering the plan complied with the Form PR filing requirements. The attachment may be attached as part of the ‘‘Multiple-Employer Plan Participating Employer Information’’ attachment or as a separate attachment entitled ‘‘Pooled Employer Plan Information.’’ See example below.
Pooled Plan Providers (PPP):
In addition, pooled employer plans must either on a separate attachment or as part of the participating employer attachment for multiple- employer plans, answer whether the pooled plan provider (PPP) administering the plan has complied with the Form PR filing requirements. If the answer is “yes,” the most recent Ack Id number from the Form PR filing’s submission must be provided. The AckID is the acknowledgement code generated by the system in response to a completed Form PR being submitted. The instructions to the Form PR advise the pooled plan provider that it must keep, under ERISA section 107, the electronic receipt for the Form PR filing as part of the records of the pooled employer plans operated.
PPP Attachment Format
Pooled Employer Plan/Pooled Plan Provider Information
(Insert Name of Plan and EIN/PN as shown on the Form 5500)
Only pooled employer plans complete.
1a. Is the pooled plan provider currently in compliance with the requirements for filing the Form PR (Pooled Plan Provider Registration Statement)? (See Form PR Instructions and 29 CFR 2510.3-44.) [ ] Yes [ ] No
1b. If “Yes” is checked in line 1a, enter the AckID for the most recent Form PR that was required to be filed under the Form PR filing requirements. (Failure to enter a valid AckID will subject the Form 5500 filing to rejection as incomplete.)
AckID ______________________
Form 5500 – Retroactively adopted plan permitted by SECURE Act Section 201.
The 2021 Form 5500 has a new Checkbox E, Part I for a plan sponsor to indicate they adopted the plan in the 2021 plan year and treated the plan as being adopted and effective in the 2020 plan year pursuant to SECURE Act section 201. For defined benefit plans in this category, the 2021 instructions provide information about how to report data regarding 2020 funding requirements (i.e., Schedule SB data)
Schedule H, Part III – Accountant’s Opinion: Originally effective for audited financial statements after December 15, 2020, the “limited scope audit” was replaced with the “ERISA Section 103(a)(3)(C) audit” to reflect SAS 136. SAS 136 permits the Accountant’s Opinion to issue a form of an unmodified opinion when the audit was performed pursuant to 29 CFR 2520.103-8 and/or 29 CFR 2520.103-12. However, this was delayed until audited financial statements ending after December 15, 2021 (e.g., 2021 calendar year plans) but could have been implemented early. The Schedule H, Line 3b, instead of being a “yes”/”no” question, now has check boxes to indicate the type of Accountant’s Opinion that was performed.
In addition, part of the new auditing requirements is for the auditor to obtain and review a full Form 5500 filing before the audit and auditor’s opinion can be finalized.
Schedules H and I, Line 4l – Has the plan failed to provide a benefit when due: Since the SECURE Act increased the required minimum distribution age from 70-1/2 to 72, the instructions have been revised to indicate this change.