Compliance July 30, 2010

DoL Says no Extension to Form 5500 Deadline

The Department of Labor has decided not to grant a blanket extension for filers of Form 5500 and Form 5500-SF.
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A SunGard Relius news release said that in a letter to the American Benefits Council dated July 21, 2010, the DoL stated it has concluded that a blanket extension for all filers is neither necessary nor appropriate. Therefore, the normal July 31, 2010, due date will apply for a calendar year plan to the 2009 plan year filing, unless the employer extends the due date.   

The DoL stated that while it recognizes that some plans may need additional time to file, it believes the current processes for obtaining an extension are adequate to address those needs.  

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An employer can obtain a 2½ month extension to file a Form 5500 or Form 5500-SF by filing Form 5558 with the IRS on or before the normal due date for the return. According to the news release, the DoL does not believe that requiring the filing of the Form 5558 imposes a significant burden on an employer requesting the extension, but states a blanket extension would require system changes that would be both complicated and costly.  

In a letter to Phyllis C. Borzi, Assistant Secretary, Employee Benefits Security Administration Jan Jacobson, Senior Counsel, Retirement Policy of The American Benefits Council, contended that the deadline should be moved off to the later of December 31, 2010 or 9 ½ months after the end of the plan year (see Trade Group Urges Form 5500 Deadline Delay).    

Jacobson pointed out that: 

  • many employers will be filing a new form, the Form 5500-SF; 
  • others, particularly employers that maintain section 403(b) plans, will effectively be filing the Form 5500 for the first time; 
  • there has been confusion over the elimination of the Form SSA as a schedule to the Form 5500, and its transition to a filing requirement with the Service through the new Form 8955-SSA (which has not yet been released); and 
  • the 2009 Form 5500 (other than the Form 5500-EZ) must for the first time be filed electronically using either EFAST2’s Web-based filing system or an EFAST2-approved vendor. Some of the EFAST2-approved vendors have only very recently developed their systems and made the necessary software available.  
Compliance July 30, 2010

The IRS to Issue a How-To for PRA Funding Relief Elections

The Internal Revenue Service (IRS) said it will be issuing detailed guidance about the special funding rules for single-employer defined benefit plans in the recent Pension Relief Act of 2010 (PRA).

 

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In Notice 2010-55, the tax agency said the anticipated guidance could deal with topics such as:

  • calculation of the alternative amortization schedules permitted under PRA 2010 (and the effect on funding balances);
  • the rules relating to installment acceleration amounts under § 430(c)(7);
  • the procedures for making the election to use an alternative amortization schedule; and
  • the notice requirements of § 430(c)(2)(D)(vi).

 

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According to the IRS, in the case of a plan year that ends before the guidance is issued, the plan sponsor will be permitted to elect to use an alternative amortization schedule under PRA without regard to whether the Form 5500 (and Schedule SB) has been filed for that plan year.  For example, the tax agency noted, the sponsor of a plan with a calendar year plan year will not be precluded from making the election for 2009 merely because the Form 5500 for that plan year has been filed for that plan year.

Accordingly, such a plan sponsor should file the Form 5500 (and Schedule SB) in accordance with the applicable deadline, taking into account the rules for obtaining an extension.

The future guidance will address reporting requirements if the plan’s Form 5500 (and Schedule SB) for the plan year has been filed, the IRS document said.

The new IRS document is at http://www.irs.gov/pub/irs-drop/n-10-55.pdf. 

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