New Guidance on 2009 Form 5500 "Schedule C" Compensation Reporting

• Ordinary Promotional Gifts -- such as coffee mugs, calendars, trophies and similar items, can generally be presumed to have a value of less than $10 for Schedule C reporting purposes. To avoid being reportable compensation, a non-monetary gift must be valued at less than $50, and the aggregate value of gifts from one source in a calendar year must be less than $100. (If the aggregate amount exceeds $100, all gifts from the source must be reported.) Non-monetary gifts of less than $10 (e.g., ordinary promotional gifts) do not need to be included in calculating the aggregate value of the gifts, even if the $100 limit is otherwise exceeded. Q&A-2.
• Business Meals and Entertainment -- are not reportable compensation if neither the amount of, nor eligibility for, the gift is based (in any part) on the recipient's position (or the amount of business the recipient conducts) with one or more ERISA plans. For example, where a brokerage firm invites employees of investment managers to a conference and reimburses for travel, meals and lodging, if the eligibility for the invitation (and the value of gifts provided) is not based in any part on whether the investment manager does business (or the amount of business the investment manager conducts) with ERISA plans, the reimbursements would not constitute Schedule C reportable compensation by either the investment managers or their employees. Q&A-3.
• No-Cost Educational Conferences Conducted by Service Providers -- are generally reportable Schedule C compensation because they are provided due to the person's position with the plan. However, the DOL will not require the conference expenses to be reported if a plan fiduciary (other than the person attending the conference) reasonably determined -- in advance and without regard to whether the conference expenses would be reimbursed -- that the:
  • plan's payment of the expenses would be prudent,
  • payment or reimbursement of the expenses would be consistent with a written plan policy or provision designed to prevent abuse,
  • conference had a reasonable relationship to the duties of the attending plan representative, and
  • expenses were reasonable in light of the benefits provided to the plan and unlikely to compromise the plan representative's ability to carry out the duties under ERISA.

  The fiduciary's determination must be in writing. Q&A-4.

• Surrender/Termination Charges -- such as back-end or deferred sales loads or commissions that investors pay when they redeem mutual fund shares or other investments are, to the extent they are paid by the plan or charged to a participant's account, direct compensation to the person receiving the load or commission. To the extent they are charged against an investment fund and reflected in the value of the plan's investment, they can be treated as eligible indirect compensation if the required disclosures are provided. Q&A-11.

• Redemption Fees -- under SEC Rule 22c-2 are fees that some mutual funds charge when shareholders redeem their shares, and are not reportable on Schedule C. Unlike a sales load, such redemption fees are used to defray fund costs associated with shareholder redemptions and are paid directly to the investment fund. Q&A-12.

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Copyright 2009, Deloitte.

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