Sitting at the Table with the DOL

In light of the fact that Wrangle has its own DOL-approved Form 5500 eFiling system, our Vice President Lynda Taylor joined an annual “backroom” DOL meeting with an invite list of only 30 people on the new software and constructive developments for the Form 5500. Lynda, who had direct access to the EFAST2 Program Manager/Lead and System Architect during the meeting, was, in fact, an active player who provided direct input on dates, fixes, edits, etc. This was both a privilege for Lynda as well as a responsibility to represent not just Wrangle but our clients as well.

During this past week’s meeting, Lynda learned of what is to be expected for the 2019 Form 5500, and we are here to share the top four details and developments to report.

• If you are curious to learn of what was learned last year click here.

The Top 4 Developments for the 5500 Future:

1. For starters, the proposed changes (from a couple of years ago) for the 2019 Form 5500 would have resulted in a major facelift to the Form and require that a new Schedule J be added to collect data for ACA. Fortunately, this has been confirmed as not a priority for the DOL. The proposed changes will continue to be kept on the shelf. In fact, the 2019 Form 5500 is to have actually very little change from the 2018 Form 5500. This is a relief considering that the US House of Representatives’ Committee on Education and Labor are petitioning to have the proposed changes enforced.  Wrangle will continue to monitor this, especially with the national elections in 2020.
2. What is to be a priority for the DOL is an aspect that would come as a surprise – the mailing address on the Form 5500. This may appear to be an inconsequential attribute; however it is actually an area of importance for the DOL. If the address is incorrect, they don’t have proper means to reach the Plan Sponsor to attend to errors and other matters of importance.  The DOL requires for it to be a USPS recognized mailing address. The primary address noted on the Form 5500 must be a USPS approved mailing address. If the physical address is different, it can be noted as the secondary address.  This will require changes for some in how the address is noted going forward. Wrangle will continue to monitor and provide communication to keep everyone abreast on this attribute of the Form 5500.
3. The Schedules H and D commonly used for filings that involve a Trust currently have a check test that requires an exact calculation on the end of the year value of interest. Going forward, a 10% +/- tolerance will be granted.
4. There was more pressure for the Form 5558, [the form used to request for an extension of an additional 2 ½ months for the Form 5500 deadline] to be efiled instead of mailed (Wrangle uses the USPS certified, return receipt mail approach). This may not appear on the surface as a worthwhile pursuit. In actuality this is quite significant. If efiling could be an option, Wrangle would be able to shorten our window on when to process the extensions since we would not need to factor in a tedious, manual process. We currently require a week; we could reduce to just a few days before the efiling deadline…this would be a game-changer.

Furthermore, the IRS who is the recipient of the Form 5558 does have a track record for false denials of the extension resulting in letters of declination to the Plan Sponsor. At which, we have had to present our certified mail receipts to prove we filed the Form 5558 on time. This set of steps rectifies the situation. Never the less, it creates a bit of frustration and unnecessary worry. With efiling, the false denials would be greatly reduced, if not eliminated. There would be immediate proof that the extension submission deadline was met.

Curious to know the percentage of third party software users for their 5500 efiling vs using the DOL’s iFile system? The answer is 90%.

In all Lynda expressed the following on her one day meeting.

“Some of the developments listed above, represent the fact that the team from the EBSA and the team from EFAST2 do incorporate elements requested from conference participants into the software approval process, how and when software changes are rolled out, and how fields of data are entered into the Form. I do have a sense of collaboration from all sides.

I am very curious to see what is to come down the road for Form 5500s. My gut says that there is more to come to modernize the Form 5500. I do think that there is hesitancy right now. The original proposed changes for Form year 2019 were quite an undertaking and to have those directed to the back shelf must have been degrading. We will have to wait while the stars line up accordingly for the proposed changes to be brought to the forefront again. Until then we will stay the course.”