Wrangle has had unwavering focused-attention on Health and Welfare Form 5500s, since 2006. You would think that after 13 years, we would have heard and seen all that can be applied to Form 5500 reporting. Nope. On occasion, we do get curve balls that require research and conversations with the DOL.
Here are two recent questions that we had to investigate:
For a particular client, the part-time employees are not eligible for benefits. However, through the EAP, catastrophic critical incident coverage is offered. If needed, the part-time employees would be granted to use this benefit. As a result are they counted as a participant for the Form 5500?
After quite a debate and comparison of notes with Wrangle, the DOL determined the following: Generally speaking, if the catastrophic critical incident benefit was used during the ERISA Plan year, then the part-time employees would need be included. If the specific benefit was not utilized, then they would not be included.
The DOL applied this particular participant definition from the Form 5500 instructions:
- The date on which the individual becomes eligible under the plan for a benefit subject only to occurrence of the contingency for which the benefit is provided (page 16 of the instructions).
We both agreed that this is a bit of a challenge and not really fitting the parameters. The DOL strongly encourages for the Plan Document and SPD to reflect that part-time employees are eligible for this specific benefit to create a clear understanding. Furthermore, the DOL encouraged for the client to seek the advice of an attorney, especially since this is a health benefit (there are other aspects under ERISA that may need to be addressed).
The IRS suspended the filing requirement (Notice 90-24) for group term life and AD&D insurance only policies (there are certain criteria points needed to be met). With this in mind, the client declined to file the Form 5500. Was this the correct approach to take?
The DOL’s Office of the Chief Accountants (they run the audits) has expressed to me the following: Both the DOL and IRS oversee the filings of the Form 5500 report. However, they don’t always apply the same set of directions on what is to be filed / not filed. Case in point: the Life and/or AD&D only plans.
The DOL does require the Life and AD&D only plans to have a 5500 report, because these benefits fall under ERISA Title I’s mandates. If one of the two…if the DOL or IRS, do require the filing for health and welfare, the 5500 is to be filed.
Furthermore, if the DOL saw that a life/AD&D plan was not filed, they could still issue a penalty to the Plan Sponsor even though the IRS does not follow these instructions.
In closing, Wrangle has access to keeps in reach various resources to help answer questions, and fortunately we have developed a strong relationship with the DOL to receive additional information and guidance*. Feel free to send an email to Ann McAdam at firstname.lastname@example.org if you need additional support and help on your Health and Welfare Form 5500s.
*Wrangle’s reference materials and feedback from the DOL are not to be taken as legal advice or guidance. There are those instances where an ERISA Attorney is needed; we will always point this out if this is the case.
Disclaimer: Wrangle, an Ascensus® company, as well as its employees and affiliates do not offer legal and accounting consultation and services. Information relayed through Wrangle-produced materials serves to provide general information only; whether expressed or implied it is not intended to constitute legal or other advice or opinions on any specific matters and is not intended to replace the advice of a qualified attorney, accountant, or other professional advisor. Wrangle applies its best effort to provide accurate and complete results and provides its service in accordance with the ERISA rules that govern Form 5500 completion. This document may contain information that is confidential. Any use, disclosure, distribution, or duplication by anyone other than an intended recipient is prohibited. Ascensus provides administrative and recordkeeping services and is not a broker-dealer or an investment advisor. Ascensus® and the Ascensus logo are registered trademarks of Ascensus, LLC. © 2019 Wrangle, an Ascensus® company. All rights reserved.