DOL Requests Form 5500 Clarification

Some employers that have filed a Form 5500 have received a “Request for Clarification” from the U.S. Department of Labor (DOL).

According to consulting firm Towers Watson, the companies that received the request were some that filed the form for their defined benefit or defined contribution plan, but not for a group health plan.

Most sponsors of qualified retirement plans subject to the Employee Retirement Income Security Act (ERISA) also sponsor an ERISA group health plan. According to Towers Watson, the DOL believes that employers that offer retirement benefits may be offering health care benefits as well, so the agency has used such compliance checks for many years. But the EFAST electronic filing system, which has been required since January 2010, has made it easier for the DOL to identify these plan sponsors and resulted in a recent increase in such compliance checks.

The DOL addresses its correspondence to the plan administrator indicated on Form 5500 for the retirement plan, and asks him or her to clarify why the employer has not filed a Form 5500 for a health plan using the employer identification number (EIN) for the retirement plan. The clarification request also acknowledges that there may be many reasons why the sponsor of a health and welfare plan is not required to file a Form 5500.

Generally, employers must file a Form 5500 for a group health plan unless a reporting exemption applies. For private employers, the largest exemption is for welfare benefit plans with fewer than 100 participants at the start of the plan year that are also unfunded, fully insured or a combination of unfunded and fully insured. Sometimes the group health plan and retirement plan have different EINs, such as when a controlled group member sponsors the retirement plan and the parent company sponsors the group health plan.

Because failing to respond to official correspondence from the DOL, Internal Revenue Service or Pension Benefit Guaranty Corporation can trigger an audit, Towers Watson warned, employers should respond to these requests as quickly as possible. Those who discover they have one or more overdue group health plan filings should consider using the DOL’s Delinquent Filers Voluntary Compliance (DFVC) program.