Final Form 5500 Report

[5500Nerd]

We are facing a debate: for a final Form 5500 report there is agreement that on page two of the Form 5500 the end of the Plan year participant count is left as zero. However, some have a covered persons count with those enrolled at the end of the Plan year on a Schedule A. Others have said that this is incorrect;  the Schedule A also is to list zero. Can anyone settle the debate? 

[Paul I]

The participant count is reported on the Form 5500 as of the end of the final plan year. As you noted, this must be zero for the 5500 to be a final filing.  Similarly, the ending assets reported for the final plan year must be zero.

On the Schedule A, Part I(e) asks for the Approximate number of persons covered at the end of policy or contract year.  The end of the policy or contract year is reported in box (g), and this can be different than the plan year end date reported on the Form 5500.  One would expect, though, that the policy or contract would have been terminated as part of the distribution of all assets from the plan, and that there would be a policy or contract termination date on which the number of persons covered is zero on or before the 5500 plan year end date.

It is worth noting that the Schedule A instructions say:

Line 1(e). Since plan coverage may fluctuate during the year,
the administrator should estimate the number of persons that
were covered by the contract at the end of the policy or contract
year. Where contracts covering individual employees are
grouped, compute entries as of the end of the plan year.

Under this instruction, if there is no one covered by the policy or contract as of the final 5500 plan year end date, the estimate of the number of persons that were covered is zero.

To my knowledge, there is no edit check between the count on the 5500 and the number reported on Schedule A, Part I(e). 

Be sure to report information in a way that is internally consistent.  For example, consider filing separate Schedules - one for the normal policy year and one for the final policy year.

A word of caution - be absolutely certain that all of the assets in the plan were fully distributed on or before the final 5500 plan year end date.

[5500Nerd]

1 hour ago, Paul I said:

The participant count is reported on the Form 5500 as of the end of the final plan year. As you noted, this must be zero for the 5500 to be a final filing.  Similarly, the ending assets reported for the final plan year must be zero.

On the Schedule A, Part I(e) asks for the Approximate number of persons covered at the end of policy or contract year.  The end of the policy or contract year is reported in box (g), and this can be different than the plan year end date reported on the Form 5500.  One would expect, though, that the policy or contract would have been terminated as part of the distribution of all assets from the plan, and that there would be a policy or contract termination date on which the number of persons covered is zero on or before the 5500 plan year end date.

It is worth noting that the Schedule A instructions say:

Line 1(e). Since plan coverage may fluctuate during the year,
the administrator should estimate the number of persons that
were covered by the contract at the end of the policy or contract
year. Where contracts covering individual employees are
grouped, compute entries as of the end of the plan year.

Under this instruction, if there is no one covered by the policy or contract as of the final 5500 plan year end date, the estimate of the number of persons that were covered is zero.

To my knowledge, there is no edit check between the count on the 5500 and the number reported on Schedule A, Part I(e). 

Be sure to report information in a way that is internally consistent.  For example, consider filing separate Schedules - one for the normal policy year and one for the final policy year.

A word of caution - be absolutely certain that all of the assets in the plan were fully distributed on or before the final 5500 plan year end date.

I thank you greatly. Some day the DOL will write the instructions with specifics. 

[Bri]

35 minutes ago, 5500Nerd said:

I thank you greatly. Some day the DOL will write the instructions with specifics. 

if they hire enough monkeys and buy enough typewriters, sure.....

[Bug on my window]

6 hours ago, Paul I said:

The participant count is reported on the Form 5500 as of the end of the final plan year. As you noted, this must be zero for the 5500 to be a final filing.  Similarly, the ending assets reported for the final plan year must be zero.

On the Schedule A, Part I(e) asks for the Approximate number of persons covered at the end of policy or contract year.  The end of the policy or contract year is reported in box (g), and this can be different than the plan year end date reported on the Form 5500.  One would expect, though, that the policy or contract would have been terminated as part of the distribution of all assets from the plan, and that there would be a policy or contract termination date on which the number of persons covered is zero on or before the 5500 plan year end date.

It is worth noting that the Schedule A instructions say:

Line 1(e). Since plan coverage may fluctuate during the year,
the administrator should estimate the number of persons that
were covered by the contract at the end of the policy or contract
year. Where contracts covering individual employees are
grouped, compute entries as of the end of the plan year.

Under this instruction, if there is no one covered by the policy or contract as of the final 5500 plan year end date, the estimate of the number of persons that were covered is zero.

To my knowledge, there is no edit check between the count on the 5500 and the number reported on Schedule A, Part I(e). 

Be sure to report information in a way that is internally consistent.  For example, consider filing separate Schedules - one for the normal policy year and one for the final policy year.

A word of caution - be absolutely certain that all of the assets in the plan were fully distributed on or before the final 5500 plan year end date.

I agree with Paul's comment with one additional perspective. I have seen many Form 5500s submitted with non-zero Schedule A headcounts for final 5500s. The reasoning I've seen given is that 1. Participants are covered on the last day of the contract year (but not any day afterwards), and 2. There is no requirement for a final filing that the Schedule A count be zero and 3. This is the data as it is provided from the carrier on the Schedule A, and they don't have a good reason to change it.

Just my $0.02. Take it for what it's worth, someone's opinion on the internet. :)