Schedule D - when to file

Sch D is needed only when plans invest in MTIAs (master trust investment accounts), GIAs (group insurance arrangements -  I assume referring only to welfare benefit plan), CCTs (common or collective trusts), PSAs (pooled separate accounts) and 103-12 investment entities (whatever they are). which along is extremely puzzling. 

The Wolters Kluwer 5500 Preparer's Manual indicates under the Who Must File Schedule D outlines when Sch D must be filed for investments in the above and indicates their related asset reporting lines on Sch H - 1c(9) through (12).  So I assume when those lines have no value, then Schedule D is not needed.   Our plans generally have almost all assets reported under (13) for mutual funds.     

So it seems for plans on Ascensus, Hancock, Empower, Principal, American Funds, etc., generally Schedule D is not needed if the plan assets are held in mutual funds and have no reporting on the Sch H lines mentioned above.

Comments are appreciated.  And yes I've ready the instructions to Schedule D - still seems clear as mud to me.   We only have a handful of long form 5500s fortunately which I'd love to transfer out!

Thank you!

I believe it matters whether or not the plan is holding true shares of the mutual fund, versus being invested in an insurance company's pooled separate account.  The pooled separate account might be nearly wholly invested in a specific mutual fund, essentially meant to mirror the fund itself, but would not be the fund itself.

Yes I'm aware that Life insurance companies such as Jon Hancock wrap a mutual fund with their fee and it is no longer the true mutual fund.  We have done schedule Ds on those types of plans all along.  I just noticed our couple Ascensus/Vanguard record-kept plans do not have a schedule D.  I believe their fund choices are the true mutual funds.  Thanks Bri - that makes sense.

Lines c(9) through c(12) on Schedule are used to report the value of each type of DFE ( MTIA, CCT, PSA, or 103-12 IE) as of the beginning and ending of the plan year.  A plan has to report on Schedule D if the plan had investments in a DFE at any time during the year.  The implication is you cannot rely solely on having a zero beginning and ending balance on these lines to determine if the plan needs to file Schedule D.

DFEs are supposed to provide reporting relief to plans.  They do, unless they don't.  The DOL publishes a user guide and notes:

"Private pension plans participating in DFEs do not have to fully report investment amounts
on the Schedule H if the DFE in which the plan is investing files a Form 5500 Annual
Return/Report along with all required schedules. In that case, the participating plans need
only complete Part I c(9) through c(12) describing the value of their interests in the DFEs.
All MTIAs are required to file Form 5500, while CCTs, PSAs, and 103-12 IEs may choose
to file in order to provide the investing pension plans the reporting relief described above.

All DFEs that file the Form 5500 are required to file a Schedule H. Pension plans investing
in filing DFEs are afforded reporting relief through decreased reporting on Schedules A,
C, and H; however, they must file a Schedule D, outlining the specific investments in each
filing DFE. Plans investing in DFEs will enter the value of their investment in all DFEs of
a certain type (MTIAs, CCTs, PSAs, or 103-12 IEs) on the corresponding Schedule H line
item."

This is great except only MTIAs are required to file 5500s.  The other types of DFEs can choose to file or not file a 5500.  Most do, but some don't.  The plan may be investing in a DFE that does not file a Schedule H.  In this case, the plan has to apportion the funds assets into the other categories listed on the Schedule H.  Not all a fun job.

The investment fund is required to notify each plan each that invests in the fund whether the investment fund will file a 5500 as a DFE.  If the plan sponsor did not save the notification, then the plan sponsor or financial advisor (or you if you are so inclined) can contact the fund and ask.  The filings are public so there is no reason for a fund not to respond.