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It’s That Time of Year Again for ERISA Plan Sponsors!

This article originally ran on July 6, 2015.

By Michael Webb

What exactly is “that time of year,” you ask? For large ERISA sponsors (and most ERISA 403(b) plans fall into this category) with calendar year plans, (again the norm for ERISA 403(b)), the statement is not so cryptic at all: it is clearly Form 5500 time, as they begin to receive questions (hopefully not too many!) from their plan auditors. 

Though 2015 should be a somewhat routine year for 5500 reporting in relative terms (Have you recovered from the stress of the 2010 filing process yet?) there is still some important practical information to be shared that will help make the 2014 5500 filing process a bit easier for plan sponsors and those who work with them. This article will attempt to provide most, if not all, of that valuable information.

What’s New

Not much, thankfully — but the DOL/EBSA did spring a new wrinkle on us in the already complex area of counting participants for 403(b) 5500 filing purposes. 

For the unfamiliar, there is a unique way that active participants are counted in 403(b) plans, due to the universal availability rules. Employees who otherwise make/receive no contributions to the 403(b) plan (elective deferral OR employer), may still be considered to be active participants, if they are eligible to make elective deferrals to the 403(b) plan, but choose not to do so. And, in most 403(b) plans, few, if any, employees are excluded from the right to make elective deferrals, and thus must be counted as active participants.

And the change to the 5500 for the 2014 plan year specifically relates to active participant count. A new line 6(a)(1) has been added to the main form that requires plan sponsors to enter the total number of active participants at the beginning of the plan year. Previously, only the number of active participants at the end of the plan year was requested, along with the total number of participants (active and inactive) at the end of the plan year and the number of participants with account balances at the end of the plan year. Thus, the participant counts, which are already an issue for 403(b) plans, will require additional scrutiny this year. 

Auditor Angst

Don’t get me wrong, I actually love plan auditors. Really, I do. They serve a critical function of providing financial statements for the plan, and they spend a lot of time and effort making certain that the statements are 100% accurate and follow accepted accounting standards to the letter. 

But most 5500 sponsors dread receiving the “list” from their auditors this time of year. The dreaded “list” is of the questions that have come to the attention of the auditor after receiving all of the information pertaining to the plan. The list is dreaded due to the fact that most of the questions are not simple (if they were, the auditor would already know the answer and would thus not need to ask the plan sponsor!) and the plan sponsor will not know the answer to the majority (if any) without researching or inquiring of others, such as the plan’s recordkeeper. 

There is some good news in this area to report, however. Gone are the early days where the auditor questions reflected a lack of unfamiliarity with 403(b) plans. It seems like only yesterday that 403(b) plan audits were required for the first time, but can you believe that five years have passed (2010)? Time flies when you’re having fun! Instead, auditors are now all too familiar with 403(b) plans, and their questions reflect this familiarity. Specifically, auditors have begun to focus on the plan’s fiduciary due diligence process in greater detail, requesting all due diligence reports and committee meeting minutes from 2014, and asking questions related to those reports/minutes. 

Practice Pointer: the prudent advisor will encourage the plan sponsor to keep the advisor in the loop regarding the questions from the plan auditor. Often, there are questions that are far easier for the advisor to answer than the plan sponsor, and the advisor can add significant value by removing the burden of responding to these questions from the plan sponsor. 

Myriad Mistakes

You know that wonderful “signature-ready” 5500 you receive from the plan’s recordkeeper? Chances are, it is not so “signature-ready” after all, even after the auditors are finished with their revisions to the “signature-ready” form. 

In a February article, the NTSA noted a plethora of 5500 filing errors uncovered upon review. In addition to the errors pointed out in that article, I will note the following uncovered in my experience:

  • inaccurate participant counts;
  • incorrect plan numbers or employer tax identification numbers;
  • figures that do not reconcile to the prior year filing, such as participant counts or plan asset figures; and
  • failure to report all applicable service provider information on Schedule C, especially concerning inactive providers that are not grandfathered from 5500 disclosure and still receive compensation from plan assets.
And what, you may ask, is the simplest solution to identifying plan errors? The answer might come as a surprise: read the form! Many errors are permitted to perpetuate simply because someone didn’t take the time to read the form closely and make certain that they understood each and every entry. Thus, if you want to reduce the amount of 5500 errors in your plan, simply read the forms with critical eye, and chances are you will spot an error or two as well! 

Don’t Forget Form 8955-SSA

And as if filing the 5500 wasn’t enough fun for plan sponsors, there is another information return that is also required to be filed for each plan; namely, Form 8955-SSA. The form, formerly known as Schedule SSA of Form 5500, is used to report participants who have terminated employment and left assets on deposit in their employer’s retirement plans. These participants are reported to the Social Security Administration, which notifies the participants of the possible existence of such assets when they file for benefits. 

An added burden of this form is the fact that, since it is an IRS — and not a DOL — form, there is a completely different filing procedure (other than the extension of time to file, where the Form 5558 is used, same as for the 5500). This is the case whether the form is filed electronically or in paper form (electronic filing is optional for all but the largest plans). Fortunately, however, there is a detailed IRS Resource Page that will provide everything you need to know regarding such filings. 


This should be a somewhat routine 5500 filing year for plan sponsors, which hopefully will provide time to improve filing procedures in order to minimize the possibility of plan errors. With the help of this article, as well as IRS and DOL tools, plan sponsors and those who work with them certainly possess the resources to reduce errors and otherwise maximize filing efficiencies. 

Practice Pointer: If you are not already involved in the 5500 process, you may wish to offer your services as a “quarterback” for the process, making certain that any questions between recordkeeper, auditor, plan sponsor and any other parties are addressed in as optimal a manner as possible, and that the 5500/8955-SSA filing process is efficient and timely. Such services have been known to add a significant degree of value to client-advisor relationships. 

Michael A. Webb, TGPC, AIF™, CEBS, chairs the NTSA Communications Committee and is Vice President at Cammack Retirement. 

Cammack Retirement is an independent retirement plan consulting firm specializing in non-profit industries. Offering tailored, actionable solutions, to help clients achieve the greatest return on their employee investment, Cammack Retirement delivers end-to-end solutions for complex retirement plan challenges.
Please note that this article is for general informational purposes only, is not intended to be taken as legal advice or a recommended course of action in any given situation. Readers should consult their own legal advisor before taking any actions suggested in this article.