ASPPA Asks DOL to Improve Form 5500

The American Society of Pension Professionals & Actuaries (ASPPA) has asked the U.S. Department of Labor (DOL) to enhance Schedule C of Form 5500.

ASPPA General Counsel and Director of Regulatory Affairs Craig P. Hoffman sent a letter to the DOL which asked for modification of Schedule C of Form 5500 to better apply new disclosure requirements, while improving consistency in the reporting of indirect compensation.

Hoffman noted that beginning with 2009 plan year filings, Form 5500 documentation has required plan sponsors to provide information on Schedule C to increase transparency regarding compensation and expenses paid by retirement plans. He believes the following improvements can be made:

  • Reporting in Part I should focus on information about service providers that received indirect compensation and eliminate the distinction between indirect compensation that is eligible for simplified reporting and indirect compensation that is not eligible. Hoffman said the term ‘eligible’ has been inconsistently interpreted by Form 5500 preparers, which has resulted in less useful data being collected by the DOL.
  • Information required about service providers that receive $5,000 or more of direct compensation should be streamlined to the amount of direct compensation, the service codes associated with such compensation, and whether the service provider also received any indirect compensation from the plan. Reducing the reporting of direct and indirect compensation would allow for a simplification of service codes because there would no longer be different types of indirect compensation. Hoffman included ASPPA’s proposed Schedule C, containing a modified listing of service codes.
  • Update instructions to Part III of Schedule C to provide that the termination of a plan’s accountant or enrolled actuary should be reported on the schedule C for the plan year in which the change is first reflected on either the Accountant’s Opinion or the Actuarial Schedule (SB or MB), instead of the current requirement that the termination be reported during the plan year in which the termination actually occurred.

Hoffman said, “Adoption of these modifications will assist both the DOL and plan fiduciaries by eliminating confusion about the reporting of the indirect compensation of service providers, improving reporting consistency and enhancing the quality of data collected by the DOL about large plans.”

A copy of the letter can be found here.