The IRS may have made the murky world of retirement plan compliance a bit easier for sponsors to manage.
The agency has put together a quick reference tool sponsors can use to better grasp basic reporting and disclosure requirements under the Internal Revenue Code and the Employee Retirement Income Security Act.
The 12-page document provides a breakdown of all the forms and filings associated with plans, what their purpose is, which sponsors are expected to file them, to which regulatory body they must be filed, and what the approximate penalty is if the forms aren't filed.
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For instance, a quick glance reveals that Form 5558, which is an application for a filing extension for plan returns, is filed to the IRS, and must be done by the last day of the seventh month after plan-year end for Form 5500.
Not surprisingly, Form 5500 is first on the list of 30 or so forms explained in the Reporting and Disclosure Guide for Employee Benefit Plans.
Under ERISA Section 502(c)(2), the DOL can assess up to $1,000 a day for the failure to file, or for not filing complete or accurate Form 5500s.
The new IRS guidebook notes sponsors of defined benefit plans that inadequately document significant reductions in benefit accruals can face steep fines, especially for larger plans — up to $500,000.
An IRS news release, while touting the guide, notes that it "is not intended to be an exhaustive list of possible civil penalties and other consequences for reporting and disclosure violations."
So think of it as the Cliffs Notes version, useful but certainly leaving a lot out.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
