Compliance December 2, 2020

DOL Reveals Changes to 2020 Form 5500

Modifications include updates in response to the SECURE Act.

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The Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA), the IRS and the Pension Benefit Guaranty Corporation (PBGC) have released advance informational copies of the 2020 Form 5500, including the Form 5500-SF and the IRS Form 5500-EZ, which now also appear on the EBSA website.

The instructions for each of the forms highlight important modifications to the forms, as well as their schedules and instructions.

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The Form 5500-SF can no longer be used by a one-participant plan or a foreign plan in place of filing of the Form 5500-EZ with the IRS. Effective for plan years beginning after 2019, one-participant plans and foreign plans can file the Form 5500-EZ electronically using the EFAST2 filing system.

There is also an increase to $2,233 per day in the maximum civil penalty amount assessable under Employee Retirement Income Security Act (ERISA) Section 502 (c)(2), as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

To conform to the new Statement on Auditing Standards 136, “Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA,” the instructions for questions on line 3a regarding the accountant’s opinion have been revised. Line 3b and its instructions have also been updated to permit filers to indicate more accurately whether there have been any permissible limitations on the scope of the audit pursuant to the DOL’s regulations.

The instructions for Schedules H and I, line 41, and Form 5500-SF, line 10f have been revised to reflect the increase in the required minimum distribution (RMD) age from 70.5 to 72 to conform to the new rules in the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

Line 5c in Schedules H and I has been revised to make clear that if the plan was covered by PBGC at any time during the plan year, filers should check the “Yes” box.

In Schedule R, line 14 has been revised to provide multiemployer plans with a choice of three counting methods to count inactive participants and to require that an attachment be provided depending on the counting method chosen.

Informational copies of the forms, schedules and instructions are available on the EBSA website.

Data and Research December 2, 2020

Majority of American Workers Are Stressed About Financial Futures

The study from EBRI and Greenwald Research also found that employees are increasingly interested in retirement education or advice.

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The Employee Benefit Research Institute (EBRI) and research firm Greenwald Research have released findings of a survey analyzing how stressed employees feel about their financial futures.

The 2020 “Workplace Wellness Survey” interviewed 1,028 American workers ages 21 to 64, finding that most are feeling stressed about their financial future. Two in three employees cited such concerns, and nearly half expressed worries about their household’s financial well-being.

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Employees also said workplace efforts are significant to their financial and physical well-being. In 2020, 35% of employees said their employer offers a financial wellness program—a slight uptick from 2018 and 2015 numbers, at 28% and 33%, respectively. Additionally, four in 10 workers rated their employer’s efforts at improving their financial and emotional well-being as very good or excellent, and about half said the same thing about their physical well-being, according to the report. Less than one in four furloughed workers rated their employer’s efforts on improving their financial and emotional well-being as very good or excellent.

When offering a financial wellness programs, employers reported that they found their employees are most interested in retirement education or advice. The top three interest points were learning how to invest money into a retirement plan (31% of employees), how much to save for retirement (30%) and how to use retirement savings to generate income (27%). Others stated they want to learn how to transition from work to retirement (26%), manage health care costs during retirement (24%) and get help with wills or estate planning (21%).

The survey asked employees how retirement planning benefits, including traditional defined benefit (DB) plans, health insurance and retirement savings plans affect their sense of financial security. Fifty-four percent of employees said offering a DB plan contributes greatly to their feelings of financial security, 63% stated the same for health insurance and 55% noted they feel much more financially secured when offered an employer-sponsored retirement plan.

The study also examined how financial insecurity impacts an employer’s workplace and financials. Employee financial insecurity can lead to high turnover rates, employee absenteeism and delayed retirement. According to the study, financially insecure employees were more likely to not finish daily tasks, look for a new job and have troubled relationships with coworkers. These financial troubles seep into their mental and physical well-being as well, including through muscle tension or back pain (51%), headaches or migraines (44%), insomnia or sleep trouble (39%), high blood pressure (33%), severe anxiety (29%), stomach ulcers (27%), severe depression (23%) and heart attacks (6%).

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