Compliance November 19, 2019

Information Copies of 2019 Form 5500 Published by DOL

Among other notable changes, the Form 5500’s Line 23 has been revised to eliminate mortality table options that are not available after 2018.

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In concert with the IRS and the Pension Benefit Guaranty Corporation (PBGC), the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) has released advance informational copies of the 2019 Form 5500 Annual Return/Report and related instructions.

The “Changes to Note” section of the 2019 instructions highlights important modifications to the Form 5500 and Form 5500-SF, as well as to their schedules and instructions.

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As required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the instructions have been updated to reflect an increase to $2,194 per day in the maximum civil penalty amount assessable under Employee Retirement Income Security Act (ERISA) Section 502(c)(2). Technically, the increased penalty under section 502(c)(2) is applicable for civil penalties assessed after January 23, 2019, whose associated violations occurred after November 2, 2015.

The advance copies of the 2019 Form 5500 are for informational purposes only and cannot be used to file a 2019 Form 5500 Annual Return/Report.

Other notable changes include the following:

  • Form 5500, Line 2d – The instructions to line 2d of the Form 5500 have been clarified on how to report the plan sponsor’s business code for multiemployer plans.
  • Schedule H Part III / Accountant’s Opinion – The instructions for lines 3a(1), 3a(2), 3a(3), and 3a(4) have been revised to align with the language in the clarified generally accepted auditing standards, AU-C 700, “Forming an Opinion and Reporting on Financial Statements,” and AU-C 705, “Modifications to the Opinion in the Independent Auditor’s Report.”
  • Schedule SB Mortality Tables – Line 23 has been revised to eliminate mortality table options that are not available after 2018.
  • Schedule R – A new line 20 has been added to obtain information related to PBGC reporting requirements resulting from unpaid minimum required contributions. Only PBGC-insured single-employer plans are required to provide this additional information.
  • Form 5500-SF – A new line 11b has been added to the Form 5500-SF that parallels the new Schedule R, line 20 for PBGC-insured, single-employer plans that file the Form 5500-SF instead of the Form 5500.

The regulators say filers should monitor the EFAST website for the availability of the official electronic versions for filing using EFAST-approved software or directly through the EFAST website.

Opinions November 19, 2019

Why Americans Need the SECURE Act

The president and chief operating officer of Nationwide Financial makes a case for how passage of the SECURE Act will improve Americans’ retirement security.

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In an increasingly competitive economy, it’s time for Congress to pass the SECURE [Setting Every Community Up for Retirement Enhancement] Act to help small businesses provide their millions of employees a workplace retirement plan.

Small-business employees are the backbone of our communities and the American economy. Comprising over 40% of the American workforce, small businesses face challenges, such as retaining top talent in an ever-tightening labor market.

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When it comes to recruiting and talent retention, 88% of small-business owners that offer a 401(k) plan to their employees say being able to do so is beneficial, and 84% say their employees view it as a necessary benefit, according to a recent Nationwide business-owner survey1. More importantly, 51% of workers over the age of 50 say an employer-sponsored retirement plan will be their main source of income in retirement2.

However, many small-business owners can’t provide a retirement plan due to costs, management requirements and complexity. This means the financial futures of almost half of the American workforce could be at risk because they lack access to these critical saving tools. We must do more to remove barriers for small-business owners who want to provide a plan to their employees.

Earlier this year, the Department of Labor (DOL) issued a rule to allow “association retirement plans (ARPs)”—a type of multiple employer plan (MEP). However, the rule’s narrow scope and limits on employer eligibility make it unlikely for ARPs to have any significant impact for most small businesses. Fortunately, the SECURE Act contains a provision that would eliminate the remaining barriers to open MEPs and provides a clear path for small businesses to pool their resources and offer retirement plans that are cost-effective and administratively simpler.

This is why Congress must pass the SECURE Act. The SECURE Act moves past the DOL’s rule to remove the association requirements, broadening the options for which employers can band together in a MEP. With fewer restrictions and more choices, employers will be able to find the MEP that best suits them and their business.

The SECURE Act levels the playing field between large and small employers when it comes to offering a workplace retirement plan, creating increased competition. In fact, a recent Nationwide business-owner survey3 shows that 59% of business owners think the SECURE Act will have a positive impact on their ability to offer a 401(k), and 80% say passage of the act will let them offer a 401(k) plan that rivals those at large corporations.

To help ensure small-businesses’ needs are addressed and their employees are supported, Nationwide has been engaged with lawmakers on open MEPs, and other legislative reforms to the U.S. retirement system, for the past decade. We also advanced another provision to increase access to workplace retirement plans by providing small-business owners a financial incentive to offer their employees a plan. The SECURE Act provides for an annual tax credit, which covers up to $5,000 of plan costs for the first three years an employer makes a plan available.

Small-business owners are looking to Washington to ensure they—and their employees—can balance their financial needs of today while preparing for the future. Now is the time for the Senate to pass the SECURE Act and help small businesses offer the workplace retirement plans that are critical to their employees’ retirement security.

1 Nationwide Business Owners Survey, 2019 Survey Report/September 12, 2019

2 Nationwide Retirement Institute Consumer Social Security Public Relations Study, March 2019

3 Nationwide Business Owners Survey, 2019 Survey Report/September 12, 2019

 

John Carter is president and chief operating officer of Nationwide Financial.

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