| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Labor Arbitrators' Awards and Biographies | ||
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.
Beginning in April 2011, the IRS’s Employee Plans Compliance Unit (EPCU) sent compliance contact letters to a selection of plan sponsors who filed Form 5500 series returns showing contributions to a plan with no participants. The purpose of this project is to determine if plan sponsors are complying with plan qualification rules and annual information reporting requirements. Potential issues include favoring highly compensated employees and engaging in prohibited and abusive tax avoidance transactions. In the latest issue of Employee Plans News, the EPCU has provided tips for responding to the compliance contact letters.
Contact letters ask for the number of participants at the beginning and end of the plan year, the amount of contributions and the value of plan assets. Sponsors may furnish any documents they believe will be helpful in responding to the letter.
After reviewing each response, the EPCU determines whether the plan sponsor needs to make corrections. For example, the plan sponsor may need to amend returns, establish or revise operational practices, administrative policies and procedures or correct plan errors using the Employee Plans Compliance Resolution System.
Common errors cited
According to the IRS, responses received so far indicate most errors are caused by: (1) computer software glitches, (2) forgetting to fill in the participant count, or (3) copying line items from a prior year’s Form 5500 return and missing the line if the new Form 5500 return has a different line number for that question.
Compliance check tips
The IRS has provided several compliance check tips for responding to the compliance contact letters.
First, the IRS recommends answering the letter “as accurately as possible by the due date.” If additional time is needed, the person listed on the letter should be contacted for an extension before the due date. Failure to provide the information requested could result in further action or examination of the plan.
Second, while a plan sponsor may email requested information, the IRS has said it will not respond by email and recommends that the sponsor include a telephone number on any correspondence.
Third, in addition to the information requested in the letter, the plan sponsor may furnish any other documents it believes will be helpful for the IRS to review.
Fourth, if the plan sponsor’s representative, rather than the plan sponsor, plan administrator or trustee, responds to the compliance check, the representative should send a completed Form 2848, Power of Attorney and Declaration of Representative, to allow the IRS to contact that person directly and also to send them a copy of the compliance check closing letter.
Finally, if the Form 5500 series return information is inaccurate, the plan sponsor should consider filing an amended return to correct it.
Source: IRS Employee Plans News, Issue 2011-5, June 22, 2011.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
Visit our News Library to read more news stories.
©2005-2024 CCH Incorporated or its affiliates
