Where are New 5500 Forms?

[Chester]

The latest news I have heard is that the new 5500 forms that are to be used for the 1999 plan year filings will not be available until the end of January or in February. That certainly does not give practitioners much time to react in order to get systems updated. Does anyone know if the IRS is considering delaying the effective date of the forms, or at least waiving extensions for the 1999 plan year filings? We are a high volume producer, and we certainly do not want to be faced with filing extensions for thousands of plans (nor do we want our clients to be upset with having to have extensions filed). I spoke with ASPA and they are considering lobbying for a waiving of the requirement to file extensions (i.e. moving the due date back 2 1/2 or 3 months). What do others intend to do?

[BeckyMiller]

Remember, the DOL is taking the lead on the new forms. The basic information that you will have to gather is reflected in the June 1998 drafts of the forms, so you can be revising your data collection methodology right now. What is really variable at this time is the presentation of the information, not the content.

The biggest change that we see is the new reporting information for direct filing entities. This is going to take some education. The positive is the reduced amount of disclosure for participant directed activity both in the ERISA schedules and in the financial audit, if required.

An aberration is the need to disclose deemed distributions from defaulted loans as a reduction in plan assets, even if the plan terms otherwise require that the loans remain as plan assets. You can expect to see that as a reconciling item on your financial audits.

So - I suggest you go to the DOL web page and start looking at the changes in the data. That way you will be prepared for the new forms.

[Chester]

Becky, I saw the draft forms a long time ago. The problem is that the forms will be changing, and nobody knows for sure what the changes will be. The DOL and IRS should be giving practitioners enough lead time to get the finalized forms into place so the forms can be generated as part of the annual valuation process. I really don't see any positives from an administrative viewpoint, as the process has not become simpler. Basically the ability to file the streamlined 5500-R 2 of every 3 years has been replaced by having to file the equivalent of the 5500-C every year for a small employer. The finalized forms were supposed to have been out by October, which would have given firms enough time to react--but as usual our government agencies never seem to be able to respond on a timely basis, even though they expect us to. I am hoping that their tardiness results in some sort of relief for us poor souls trying to comply with these new forms.

[BeckyMiller]

Chester - The main point is that the majority of the content of the Forms will not be changing from the June 1998 drafts. The main change will be just the format in response to optical scanning and e-filing.

I realize that the IRS is busy requesting comments again on the content of some forms. But I doubt that they will make any changes from the drafts that are out of the 1999 year.

We are doing our data collection forms off those drafts and I recommend that you do so, also.

You should also know that the DOL is willing to provide speakers for conferences to discuss these forms. If you have a regional group of preparers that could schedule a time, I would contact Ian Dingwall's office to recruit a speaker.

[Chester]

Thanks for the info Becky but it doesn't change my original point. The forms will have some changes, and the IRS is again not giving practitioners enough time to get systems in place to start producing the forms. We begin to process calendar year valuations in January due to our heavy volume. I spoke to Peak 1 (owners of Hyperprep) and they do not anticipate having Hyperprep ready until April at the earliest (our prior experience with Peak 1 is that if they say April it will probably be May or June). I would like to see the effective date either delayed or have the extension requirement waived because we will not have enough time to go back and generate all of the 5500 forms needed by the July 31 deadline if we get such a late start--the content of the forms is not the issue here!

[Chester]

My understanding is that we have been doing this for terminating plans to close out the filings, and the IRS has not yet objected. I would assume that once the new forms are released however, the IRS will expect you to use the new forms from that point on. I'm not sure how the IRS or DOL would react if you did this for an on-going plan, as the same need to get the filings completed would not be present.

[John A]

jkharvey, I beleive there has been informal guidance from the DOL that it would be o.k. I haven't heard anything about the IRS. If I were you, I'd go ahead and file with the crossed out and changed date. Of course, this should only be necessary if there is a short plan year due either to a change in plan year or to a plan termination. I would not do it if there was not a short plan year.

[This message has been edited by John A (edited 01-12-2000).]

[jkharvey]

If we file a 1999 F5500 on the 1998 Form (cross out the year to reflect 1999), do you think this will cause a problem for either IRS or DOL? We don't intend to do this for all clients, this is a particular situation for one client only.

[BeckyMiller]

I have placed a call into the office of the DOL officials responsible for the new EFAST system to see if I can get an update on all of these questions. So - stay tuned.

[mwyatt]

What we've found in the past concerning a final short year filing is that if the filing deadline (including 2 1/2 month extension) falls prior to the time that the new forms are released, then the IRS will accept the prior year form. However, if it falls after the date that tne new forms are (or should have been) released that you will get a reject letter and ask you to resubmit on the new forms. You might want to wait until new forms show up unless your deadline is near. If your client is really anxious go ahead, but let the client know that the filing may need to be redone due to chance of IRS rejection.

[BeckyMiller]

I talked to the DOL's director of the new EFAST program.

The revised drafts of the "handprint" forms should be out in the Federal Register before the end of the month. It is expected that they will be on the DOL website at the same time.

The information required for software firms to program the information is expected to be released towards the end of February.

If you need to file for a 1999 short year prior to the availability of the new forms, you may use the 1998 forms, but you need to send them to the new address.

At this point in time they are not contemplating a blanket extension of time, but that does not mean that may not happen.

As noted in earlier messages, the information in these new forms will be the same as described in the June 1998 drafts.

[Chester]

Thanks for the update Becky. I greatly appreciate the new info.

[jkharvey]

What is the new address where 1999 F5500 should be submitted. In particular, short year returns that are using the 1998 Form with the year changed to 1999.

[BeckyMiller]

I hate to say that I don't know the new address yet. It should be on the draft forms as soon as they are posted to the DOL's website. I checked on Friday and they were not up yet. The new processing center is to be locator in or near Lawrence Kansas. That is all I know so far.

[Guest wlank]

"The revised drafts of the "handprint" forms should be out in the Federal Register before

the end of the month. It is expected that they will be on the DOL website at the same time."

Well, today is the end of the month. Nothing in today's FR, nothing on the DOL web site. This thing with the new 5500 forms is not getting out of hand - it has gotton.

Does anyone else feel as I do: that the new forms must wait until 2000? I need forms today. Very simple, I only bill clients once a year, upon completion of the prior years work. My software provider is estimating May 31 for 1999 5500 software. That means the end of June if I'm lucky. Doing them without the software which I've used for eleven years is not a viable option.

Net results; $0 cash flow in my business for the first half of the year. Any other small TPA's out there feel this way?

Bill

[Chester]

Amen to that. If you saw my previous posting, you know how I feel on the subject. I have already lobbied ASPA to see if they can persuade IRS or DOL to delay the effective date or move the due dates back. This delay is ridiculous, as the forms were originally supposed to be out in October, 1999. This really imposes hardships not only on us but on our clients, as the forms won't be available until April or May with our software provider. Clients that need audits performed will not appreciate having to wait for their 5500 forms--this is another example of the government making life difficult when it doesn't have to be that way. I aslo chuckle that the redesign of the forms was done in the interests of "simplification"--the government's definition of this word surely doesn't coincide with everyone else's. The forms greatly complicate administration, and basically cause small plans to have to file the equivalent of the 5500-C each and every year, instead of every third year the way the process works now. Your best bet is to lobby the government for a delay, and if enough people complain, maybe something will happen (but don't hold your breath!)

[John A]

There is an announcement in the Federal Register that the revised 5500 will be (has been?) released today. However, I have not been able to download the PDF files (connection timed out errors, probably due to size of the files). Anyone else have any luck?

The revised form is not on the DOL website yet, perhaps it will be by the end of the day. Anyone know of anywhere else I should be looking?

[Guest ak]

Several commentators asked that the form or the instructions to the new Form 5500 authorize "synthetic GICs," "separate account GICs," and insurance company "stable value funds" to be reported at contract or "book" value on the Schedule A, Schedule H and Schedule I on a single line item. The DOL did not adopt this recommendation because of insufficient information and stated that these contracts must continue to be reported in conformance with existing annual reporting requirements. Does anyone know what these existing requirements are for such contracts?

[BeckyMiller]

The Forms are published in the February 2 copy of the Federal Register. I had to wait until 8 p.m. CST to be able to download them. Too much activity on the WEB, I guess. The whole package is only 3 .PDF files and they are huge!

They are not yet on the DOL's web page, but I would expect to see them shortly.

For those of you filing short periods with the old form - the address is:

PWBA

P.O. Box 7043

Lawrence, KS 60044-7043

[jkharvey]

Thanks for the information regarding the address for Form 5500. If we have already filed F5500 (short year returns) to the old address with the IRS, should we refile to this new address?

[Dave Baker]

The Department of Labor has posted the 5500 schedules in separate PDF files - much more manageable download - here's the link:

http://www.dol.gov/dol/pwba/public/pubs/forms/fm99inx.htm