Groups Say Form 5500 Proposed Updates Too Burdensome

Retirement industry groups ask agencies to scale down reporting requirements for investments, fees and compliance.

By Rebecca Moore | December 07, 2016
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The American Benefits Council, the Committee on Investment of Employee Benefit Assets (CIEBA), the Society for Human Resource Management (SHRM) and the ERISA Industry Committee (ERIC) have asked regulators to lighten up on some of the requirements that would be imposed on plan sponsors by proposed modifications to Form 5500.

Last July, the U.S. Department of Labor’s (DOL) Employee Benefit Security Administration (EBSA), along with the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) published a notice of proposed changes to its annual reporting regulations under Title I of the Employee Retirement Income Security Act (ERISA).

The proposal included improvement on reporting regarding alternative investments, hard-to-value assets, and investments through collective investment vehicles. “The proposed changes are designed to foster ongoing monitoring of employee benefit plans by employers, plan fiduciaries, and participants and beneficiaries, and improve the ability of the Agencies to fulfill their statutory oversight roles,” the agencies said in a fact sheet

In their letter, CIEBA, SHRM and ERIC suggested the agencies should make investment disclosures consistent with other reporting requirements. They noted that in Accounting Standards Update 2015-12, the Financial Accounting Standards Board (FASB) changed its reporting requirements so that employee benefit plans only have to report their investment holdings by their general type, not by other, hard-to-measure information such as the nature of the investments and their risks. “The Agencies are now proposing to create a new, more burdensome system for investment-related disclosures. As a result, employers will have to expend resources to report the same assets in two separate ways. Not only is that costly and confusing, but it is also redundant to what is already being disclosed in the plan financial statements under the FASB requirements,” the groups argue.

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