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CCH® BENEFITS — 12/20/06

Agencies Issue Proposed Changes To Form 5500 Annual Report As Required By The PPA

from Spencer’s Benefits Reports: The Department of Labor’s Employee Benefits Security Administration (EBSA), the Internal Revenue Service, and the Pension Benefit Guaranty Corporation have issued proposed changes to the Form 5500 annual return/report filed by employee benefit plans required by the Pension Protection Act of 2006 (PPA) (P.L. 109-280). The proposed changes, which would apply to 2008 plan year filings, were published in the December 11 Federal Register.

The proposed changes supplement proposed revisions to the 5500 form that were published by the agencies prior to the enactment of the PPA.

The supplemental proposal would replace the Schedule B, Actuarial Information, with separate actuarial schedules for single-employer plans (Schedule SB) and multiemployer plans (Schedule MB) to reflect PPA changes in funding and annual reporting requirements; add new questions to the Schedule R, Retirement Plan Information, to collect additional information regarding single-employer and multiemployer defined benefit plans required by the PPA; and have the Form 5500-SF annual return/report (Short Form 5500) included in the July 2006 proposal serve as the simplified report required by the PPA for plans with fewer than 25 participants.

The PPA significantly changed the funding requirements applicable to defined benefit plans. Those changes rendered the existing Schedule B largely obsolete, especially for single-employer defined benefit plans. While the PPA changes for multiemployer defined benefit plans allowed for continued use of a reporting scheme similar to the existing Schedule B, a number of Schedule B changes were required even for multiemployer plans. The agencies believe that the appropriate way to address the PPA changes is to eliminate the existing Schedule B and create two new Schedules—the Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information; and the Schedule MB, Multiemployer Defined Benefit Plan and Money Purchase Plan Actuarial Information.

In the notice, the agencies explain, “In light of the time constraints, the agencies are publishing in this notice charts listing the line item data elements on the new actuarial schedules (Schedule SB and Schedule MB) and the new line item data elements for the Schedule R, as well as an indication of which items on the Schedule SB and Schedule MB are the same, similar to, or different from existing Schedule B data items. To enable the public to better evaluate the proposed changes, the Department is also making available on its Web site at http://www.dol.gov/ebsa, mock-ups of the Schedules SB, MB, and R. The agencies believe the information being published will provide an adequate basis for public comments on the supplemental proposed form changes. The instructions for the new Schedules SB and MB and the new Schedule R questions will be subject to a later publication so that they can be developed based on guidance to be issued by the IRS or PBGC implementing the PPA requirements underlying the Form 5500 annual return/report data elements. For example, guidance may explain the manner in which the employer makes elections with respect to the carryover and/or prefunding balances.”

Comments on the proposed revisions must be submitted by Jan. 10, 2007, to the Office of Regulations and Interpretations, EBSA, Room N-5669, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, DC 20210, Attn: Supplemental Form 5500 Revision (RIN 1210-AB14). Comments also may be submitted via the Internet to http://www.regulations.gov or via e-mail to the following address: e-ORI@dol.gov.

For further information, contact Ann Junkins of the IRS at (202) 283-0722, for questions relating to Schedules SB, MB, and Schedule R, as well as general questions relating to reporting under the Internal Revenue Code; Amy Viener of the PBGC at (202) 326-4080, for questions relating to Schedules SB and MB or Michael Packard at (202) 326-4080, for questions relating to the Schedule R, as well as questions relating to the general reporting requirements under Title IV of ERISA; or Elizabeth A. Goodman or Yolanda Wartenberg of the EBSA at (202) 693-8523, for questions relating to the Short Form 5500-SF, as well as general reporting requirements under Title I of ERISA.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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