Bill Aims to Help Small Businesses Aggregate Form 5500s

Bipartisan legislation to reduce duplicative filing costs for small businesses looking to offer retirement plans to their employees was introduced in the Senate and the House of Representatives.

The bill directs the Department of Labor (DOL) and the Treasury Department to allow employers and sole-proprietors participating in retirement plans administered in the same way to file a single aggregated Form 5500, a required annual return that provides compliance information to the DOL and Treasury.

Under current law, despite sharing a common administrative framework, each individual plan is still required to file a separate Form 5500 to satisfy reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. The proposed bill would eliminate duplicative reporting by plan administrators, which will reduce costs for small businesses that maintain retirement plans. To file an aggregated Form 5500, the retirement plans would need to have the same trustee, fiduciary, plan administrator, plan year and investment menu.

“As the nature of work continues to change, increasing access to workplace retirement plans is a crucial step in providing a secure retirement to millions of Americans,” says Senator Mark Warner. “For smaller employers, offering a retirement plan can be expensive and complex, so we should make it easier and reduce duplicative filing costs for them to offer retirement plans and promote retirement security for all workers.”

The legislation was introduced in the Senate by U.S. Senators Mark R. Warner (D-Virginia), a member of the Senate Finance Committee, and Susan Collins (R-Maine), the chairman of the Senate Aging Committee. In the House, the legislation was sponsored by Congresswoman Linda Sánchez (D-California), a member of the House Committee on Ways and Means, and Congressman Phil Roe (R-Tennessee), a member of the House Committee on Education and the Workforce.

To provide the DOL and Treasury time to implement this change, the proposal has an effective date of no later than January 1, 2021. A copy of the legislative text is available here.