5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
A traditional annuity provided by TIAA-CREF did not constitute an allocated insurance contract for purposes of the Form 5500 annual reporting requirements, according to ERISA Opinion Letter 2010-01A issued by the Employee Benefits Security Administration (EBSA).
It was represented that the traditional annuity, which was one of the investment options offered under plans sponsored by TIAA-CREF, was an "allocated contract" because each contribution buys a guaranteed specific amount of benefits for participants based on the rate schedule in effect at the time paid. Under ERISA Reg. §2520.104-44(b)(2), certain pension plans, the "fully guaranteed" benefits of which are provided "exclusively through allocated insurance contracts or policies," are provided a limited exemption from and alternative method of compliance with the requirement to report certain financial information on the Form 5500 annual report and the requirement to engage an independent qualified public accountant to examine the financial statements and schedules of the plan.
In EBSA's view, the traditional annuity is not a fully allocated contract within the meaning of ERISA Reg. §2520.104-44(b)(2). Upon receipt of each contribution or "premium," TIAA does not unconditionally guarantee to provide a retirement benefit of a certain amount or a "specific dollar benefit" without adjustment for fluctuations in the market value of TIAA's underlying assets. The traditional annuity guarantees only a return of contributions and a minimum rate of interest during the accumulation phase, EBSA said.
However, because this issue was "not entirely free from doubt," EBSA said that it will not reject a Form 5500 filed for 2008 and prior plan years solely for the failure report the traditional annuity as an unallocated insurance contract. However for plan years beginning on or after January 1, 2009, the traditional annuity cannot be treated as an allocated contract within the meaning of ERISA Reg. §2520.104-44(b)(2) and Form 5500 instructions. Also, EBSA said, the relief is limited to Form 5500 annual reporting requirements and does not address any other provisions of ERISA Title I or any other applicable state or federal law.
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