Private Pensions: Government Actions Could Improve the Timeliness and Content of Form 5500 Pension Information

The Department of Labor issued a final regulation mandating electronic filing of all Form 5500 reports filed with the agency beginning with the 2009 plan year. Labor, in cooperation with the IRS and the Pension Benefit Guaranty Corporation (PBGC), also issued revised and simplified versions of the Form 5500 with one major objective being to facilitate the move to electronic filing. Part of that effort involved revising the form in a way that addressed statutory limitations in the Internal Revenue Code on the IRS's authority to require electronic filing of annual return information. In cooperation with the IRS and PBGC, Labor also awarded a contract for the development of EFAST 2, the new wholly electronic filing system. The specifications addressed GAO's recommendations on signing and authenticating electronic filings by requiring the development of a streamlined and simplified process of obtaining electronic signatures under the EFAST 2 system.

The IRS supports electronic filing of the Form 5500. The Department of Labor issued a final regulation mandating electronic filing of all Form 5500 reports filed with the Department beginning with the 2009 plan year. Labor in cooperation with the IRS and the Pension Benefit Guaranty Corporation (PBGC) also issued revised and simplified versions of the Form 5500 with one major objective being to facilitate the move to electronic filing. Part of that effort involved revising the form in a way that addressed statutory limitations in the Internal Revenue Code on the IRS's authority to require electronic filing of annual return information. In cooperation with the IRS and PBGC, Labor also awarded a contract for the development of EFAST 2, the new wholly electronic filing system. The specifications addressed GAO's recommendations on signing and authenticating electronic filings by requiring the development of a streamlined and simplified process of obtaining electronic signatures under the EFAST 2 system.

The Pension Benefit Guaranty Corporation (PBGC) agreed that electronic filing will reduce errors and speed processing time--EFAST is inefficient and slow because it's paper-based. The Department of Labor issued a final regulation mandating electronic filing of all Form 5500 reports filed with the Department beginning with the 2009 plan year. Labor, in cooperation with PBGC and the IRS, also issued revised and simplified versions of the Form 5500 with one major objective being to facilitate the move to electronic filing. Part of that effort involved revising the form in a way that addressed statutory limitations in the Internal Revenue Code on the IRS's authority to require electronic filing of annual return information. In cooperation with the IRS and PBGC, Labor also awarded a contract for the development of EFAST 2, the new wholly electronic filing system. The specifications addressed GAO's recommendations on signing and authenticating electronic filings by requiring the development of a streamlined and simplified process of obtaining electronic signatures under the EFAST 2 system.

The Department of Labor's new system for electronic filing addresses GAO's recommendation on error checking and correspondence by requiring the system to electronically check filings for errors at the earliest possible point in time (upon receipt of the filing). Filers would be electronically notified of such filing errors within minutes. EFAST 2 is scheduled to be operational on January 1, 2010. In the meantime, Labor has made improvements to the current electronic filing process in EFAST. For example, Labor modified procedures and instructions so that electronic filers can fax rather than mail their application for an electronic signature.

The Employee Benefits Security Administration's (EBSA) public disclosure operation makes information available to the public as it is processed. This is the same information that goes into building the research file. Researchers who wish to access data before the research file is complete frequently access it this way. Additionally, with the implementation of EFAST 2, the Department's website will publicly disclose Form 5500 information on an individual filing basis beginning January 1, 2010. The information released will be timely as it will be posted within one day of receipt of a successful filing submission. The Department's research file is an aggregate of individual filings and can not be released until filings are combined and analyzed. As EFAST 2 will process filings within minutes rather than months, the Department should be able to complete and release the research file months earlier than it had been using EFAST processed data.

The Department of Labor (Labor), Pension Benefit Guaranty Corporation (PBGC), and the IRS currently apply computerized "entity control" tests to Form 5500 filings as part of the EFAST processing system, which are designed to track individual plans and determine if consistent identifying data is reported each year for a particular filer in order to maintain accurate year-to-year records. Labor coordinates with the IRS to monitor compliance with the annual reporting requirements. The most productive area of coordination between the two agencies involves the IRS marketing the availability of Labor's Delinquent Filer Voluntary Compliance Program (DFVCP) through its late and stop-filer programs. In its enforcement correspondence, the IRS prominently suggests the DFVCP as a means of avoiding severe, late and non-filer sanctions under the Internal Revenue Code. The IRS is marketing DFVCP to 100% of the late filers and a significant number of stop-filers. Through these efforts, the three agencies can track and ensure plans are meeting the statutory requirement to file a Form 5500 annually. In terms of tracking plan filings, Labor knows which ones are late by running a query in the Form 5500 database. However, Labor is leveraging IRS's resources to communicate with 100% of plan administrators who filed late. Similar to IRS' late filer program, Labor is working with the IRS to establish a large scale stop-filer program. In this way, the IRS can identify 100% of the employee benefit plans that inappropriately stopped filing and provide Labor with data containing the stop filers against whom the IRS assessed penalties.

The Department of Labor (Labor), Pension Benefit Guaranty Corporation (PBGC), and the IRS currently apply computerized "entity control" tests to Form 5500 filings as part of the EFAST processing system, which are designed to track individual plans and determine if consistent identifying data is reported each year for a particular filer in order to maintain accurate year-to-year records. Labor coordinates with the IRS to monitor compliance with the annual reporting requirements. The most productive area of coordination between the two agencies involves the IRS marketing the availability of Labor's Delinquent Filer Voluntary Compliance Program (DFVCP) through its late and stop-filer programs. In its enforcement correspondence, the IRS prominently suggests the DFVCP as a means of avoiding severe, late and non-filer sanctions under the Internal Revenue Code. The IRS is marketing DFVCP to 100% of the late filers and a significant number of stop-filers. Through these efforts, the three agencies can track and ensure plans are meeting the statutory requirement to file a Form 5500 annually. In terms of tracking plan filings, Labor knows which ones are late by running a query in the Form 5500 database. However, Labor is leveraging IRS's resources to communicate with 100% of plan administrators who filed late. Similar to IRS' late filer program, Labor is working with the IRS to establish a large scale stop-filer program. In this way, the IRS can identify 100% of the employee benefit plans that inappropriately stopped filing and provide Labor with data containing the stop filers against whom the IRS assessed penalties.

The Pension Benefit Guaranty Corporation (PBGC), the IRS and the Department of Labor (Labor) have agreed on certain processing enhancements to aid the existing EFAST entity control system. The three agencies apply computerized "entity control" tests to Form 5500 filings as part of the EFAST processing system, which are designed to track individual plans and determine if consistent identifying data is reported each year for a particular filer in order to maintain accurate year-to-year records. Labor coordinates with the IRS to monitor compliance with the annual reporting requirements. The most productive area of coordination between the two agencies involves the IRS marketing the availability of Labor's Delinquent Filer Voluntary Compliance Program (DFVCP) through its late and stop-filer programs. In its enforcement correspondence, the IRS prominently suggests the DFVCP as a means of avoiding severe, late and non-filer sanctions under the Internal Revenue Code. The IRS is marketing DFVCP to 100% of the late filers and a significant number of stop-filers. Through these efforts, the three agencies can track and ensure plans are meeting the statutory requirement to file a Form 5500 annually. In terms of tracking plan filings, Labor knows which ones are late by running a query in the Form 5500 database. However, Labor is leveraging IRS's resources to communicate with 100% of plan administrators who filed late. Similar to IRS' late filer program, Labor is working with the IRS to establish a large scale stop-filer program. In this way, the IRS can identify 100% of the employee benefit plans that inappropriately stopped filing and provide Labor with data containing the stop filers against whom the IRS assessed penalties.

As a result of the form review conducted by the Department of Labor (Labor), IRS and the Pension Benefit Guaranty Corporation, and enactment of the Pension Protect Act of 2006 (PPA), these three agencies developed new reporting requirements for multiemployer defined benefit plans. These new reporting requirements were published in the Federal Register for public comment as part of a Notice of Supplemental Proposed Forms Revisions designed to implement certain PPA-mandated annual reporting requirements and to supplement proposed revisions to the Form 5500 published prior to the enactment of the PPA. The multiemployer defined benefit plan changes are included in a new Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information) and revised Schedule R (Retirement Plan Information), which was incorporated into the Form 5500 series beginning with the 2008 plan year. The Schedule MB and Schedule R revisions have already been published as final form revisions in the Federal Register (see "Notice of Adoption of Revisions to Annual Return/Report Forms," 72 Fed. Reg. 64731, November 16, 2007). The questions on the form are similar to the questions GAO recommended that the agencies address.

The IRS agrees with the Pension Benefit Guaranty Corporation's (PBGC) recommendations to modify the Form 5500 Schedule R Retirement Plan Information to collect additional information on multiemployer pension plans. As a result of the form review conducted by these three agencies, and enactment of the Pension Protect Act of 2006 (PPA), these three agencies developed new reporting requirements for multiemployer defined benefit plans. These new reporting requirements were published in the Federal Register for public comment as part of a Notice of Supplemental Proposed Forms Revisions designed to implement certain PPA-mandated annual reporting requirements and to supplement proposed revisions to the Form 5500 published prior to the enactment of the PPA. The multiemployer defined benefit plan changes are included in a new Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information) and revised Schedule R (Retirement Plan Information), which was incorporated into the Form 5500 series beginning with the 2008 plan year. The Schedule MB and Schedule R revisions have already been published as final form revisions in the Federal Register (see "Notice of Adoption of Revisions to Annual Return/Report Forms," 72 Fed. Reg. 64731, November 16, 2007). The questions on the form are similar to the questions GAO recommended that the agencies address.

As a result of the form review conducted by the Department of Labor (Labor), IRS and the Pension Benefit Guaranty Corporation, and enactment of the Pension Protect Act of 2006 (PPA), these three agencies developed new reporting requirements for multiemployer defined benefit plans. These new reporting requirements were published in the Federal Register for public comment as part of a Notice of Supplemental Proposed Forms Revisions designed to implement certain PPA-mandated annual reporting requirements and to supplement proposed revisions to the Form 5500 published prior to the enactment of the PPA. The multiemployer defined benefit plan changes are included in a new Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information) and revised Schedule R (Retirement Plan Information), which was incorporated into the Form 5500 series beginning with the 2008 plan year. The Schedule MB and Schedule R revisions have already been published as final form revisions in the Federal Register (see "Notice of Adoption of Revisions to Annual Return/Report Forms," 72 Fed. Reg. 64731, November 16, 2007). The questions on the form are similar to the questions GAO recommended that the agencies address.