ETFs in 401k - 5500 Reporting

If a 401k PS Plan holds an Exchange-Traded Fund (ETF) that is registered with the SEC, should those assets be reported on line 1c(13)?

If the thing a retirement plan’s trust owns is a share of a fund of an SEC-registered investment company, one could report it on line 1c(13).

But the plan’s administrator should confirm exactly the nature of the thing the plan’s trust owns. Some things people describe as ETF shares might not be registered investment company shares.

If the ETF shares or interests are held in a brokerage-window account, the plan’s administrator might consider this alternate reporting:

Note. For the 2021 plan year, plans that provide participant-directed brokerage accounts as an investment alternative (and have entered pension feature code ‘‘2R’’ on line 8a of the Form 5500) may report investments in assets made through participant-directed brokerage accounts either:

1. As individual investments on the applicable asset and liability categories in Part I and the income and expense categories in Part II, or

2. By including on line 1c(15) the total aggregate value of the assets and on line 2c the total aggregate investment income (loss) before expenses, provided the assets are not loans, partnership or joint-venture interests, real property, employer securities, or investments that could result in a loss in excess of the account balance of the participant or beneficiary who directed the transaction. Expenses charged to the accounts must be reported on the applicable expense line items. Participant-directed brokerage account assets reported in the aggregate on line 1c(15) should be treated as one asset held for investment for purposes of the line 4i schedules, except that investments in tangible personal property must continue to be reported as separate assets on the line 4i schedules.

Form 5500 Instructions page 35 https://www.dol.gov/sites/dolgov/files/EBSA/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2021-instructions.pdf.

This is not advice to anyone.