Compliance November 25, 2008

Regulators Unveil 2008 Form 5500

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service and the Pension Benefit Guaranty Corp released advance copies of the 2008 Form 5500 annual return/report.
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A news release noted that pension and welfare benefit plans are required to file an annual return/report about their financial conditions, investments and operations each year and that they can generally satisfy that requirement by filing the Form 5500 and any required attachments.

According to a release, modifications to the Form 5500 for plan year 2008 are described under “Changes to Note’ in the 2008 instructions.

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Significant changes include:

  • New actuarial schedules replace the Schedule B (Actuarial Information) and must be used for plan year 2008 plan filings—Schedule MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information) and Schedule SB (Single-Employer Defined Benefit Plan Actuarial Information). If the due date of the plan’s 5500 occurs before the 2008 forms are available for filing, the plan has an automatic extension until 90 days after the 2008 forms are available for use for filing in which to file a complete Form 5500, including the Schedule SB or MB, as appropriate.
  • Multiemployer defined benefit pension plans generally must file additional information as attachments to the Schedule R (Retirement Plan Information). Defined benefit plans of 1,000 or more participants must also include financial asset breakout information as an attachment to the Schedule R.
  • The voluntary simplified reporting option for certain plans with fewer than 25 participants at the beginning of the plan year will continue for the 2008 filings.

Information copies of the forms, schedules, and instructions are available here. Filers should monitor the EFAST Web site for information on approved software vendors for completing the 2008 forms and on the availability of the official government-printed forms, according to the release.


Compliance November 25, 2008

EBSA Explains Plan Official Bonding Requirements

The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) released guidance about fidelity bonding requirements.
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The Field Assistance Bulletin (FAB) 2008-04 provides guidance to the agency’s national and regional offices on the fidelity bonding requirements under section 412 of the Employee Retirement Income Security Act (ERISA). According to an EBSA news release, the guidance in the FAB covers a variety of issues related to compliance with ERISA’s fidelity bonding requirements, including:

  • what losses and ERISA bond must cover
  • whether a fidelity bond is the same as fiduciary liability insurance
  • how to calculate the bond amount when multiple plans are covered under a single bond
  • whether the $1 million bond maximum applies in the case of plans that hold employer securities solely as a result of investments in pooled investment funds
  • whether third-party service providers are subject to the bonding requirements if they handle plan funds.

EBSA explained that Section 412 of ERISA requires all persons, including fiduciaries, who handle funds or other property of an employee benefit plan (otherwise referred to as plan officials) to be bonded in accordance with section 412 and the department’s regulations unless they are covered by an exemption.

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Each plan official is required to be bonded for at least 10% of the amount he or she handles, but in no event less than $1,000. The maximum bond amount required under section 412 with regard to any one plan is $500,000 per plan official, or $1 million per plan official in the case of a plan that holds employer securities.

FAB 2008-04 is here.

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