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DOL Releases 2015 Form 5500 Including New IRS Compliance Questions

December 9, 2015 - UPDATED February 23, 2016

In December 2015, the Department of Labor released the 2015 version of the Form 5500, the annual report which must be filed by certain employee benefit plans subject to ERISA.  Three of the Schedules to the 2015 version include new IRS compliance questions for retirement plans. The IRS has recently announced that because these questions were not approved by the Office of Management and Budget when the Forms 5500 were published, the questions should not be completed for the 2015 plan year.  In this updated client alert, we discuss why employers who sponsor retirement plans will want to review these questions now even though they should not complete them for the 2015 plan year.

I. The New Questions

The new questions are found on Schedule H (Financial Information), Schedule I (Financial Information – Small Plans) and Schedule R (Retirement Plan Information).

Schedules H and I now address additional issues related to the plan's financial transactions:

  • Whether the plan incurred unrelated business taxable income.
  • Whether in-service distributions were made during the plan year.
  • The name and phone number of the plan's trustee or custodian.

Schedule R further addresses the plan's satisfaction of certain qualification requirements under the Internal Revenue Code:

  • How the plan satisfies the applicable coverage and nondiscrimination tests.
  • Whether and when the plan has been amended for required tax law changes.
  • The date of the plan's last favorable determination, opinion, or advisory letter.
  • Whether the plan is maintained in a U.S. territory.

Each of the new questions is also found on the 2015 version of Form 5500-SF which is filed by certain small plans.  Form 5500 SF contains an additional IRS compliance question regarding whether required minimum distributions were properly made to 5% owners who attained age 70-1/2 regardless of whether such owners had retired.

II. Steps Employers Can Take Now

As noted above, the IRS has recently stated that the new questions should not be completed for the 2015 plan year.  Nonetheless, reviewing and answering them now, even if only internally and informally, can serve at least two purposes for employers who sponsor retirement plans.

  • The new questions can serve as a "mini-audit" which may identify issues that can be addressed either through self-correction or through a formal submission to the IRS Employee Plans Compliance Resolution System prior to any IRS-initiated enforcement action.
  • Although the scope of any IRS audit need not be limited to the new questions, they can nonetheless provide a guide to the types of issues that might arise on audit. 

This client alert has discussed how employers can make use of the new questions in advance of any requirement that they be formally answered on Form 5500.   For more information about the new questions, Form 5500 filing and qualified retirement plan compliance in general, or other issues concerning your employee benefit plans, please contact Joanne C. Youn at jyoun@capdale.com or at 202.862.7855. 

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About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

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Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

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It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.

© 2016 Caplin & Drysdale, Chartered
All Rights Reserved.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at www.caplindrysdale.com.
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
202.862.5000
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2020 Caplin & Drysdale, Chartered
All Rights Reserved.

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