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CCH® PENSION AND BENEFITS — 12/3/07

Revised Form 5500 and related final regulations issued for 2009

Revised Form 5500 annual reporting forms, schedules, instructions and implementing regulations have been issued by the Employee Benefits Security Administration (EBSA), the IRS and the Pension Benefit Guaranty Corporation (PBGC) for the 2009 plan year. According to EBSA, the issuances further three agency initiatives: 1) the creation of a fully electronic system for filing annual reports, 2) making substantive changes in the type of information gathered in the annual reports, specifically with respect to fees and expenses, and 3) effectuating the reporting and disclosure requirements of the Pension Protection Act of 2006 (PPA; P.L.109-280).

Electronic filing mandate postponed to 2009

The current ERISA Filing Acceptance System (EFAST) is being replaced by an entirely electronic filing system (EFAST2), currently under development. Originally, the EFAST2 electronic filing mandate was to be in effect for the 2007 plan year, but the Department of Labor previously changed the effective date to the 2008 plan year. Now, in reaction to public comments seeking further deferral of implementation of the revised forms and the electronic filing requirement, the Agencies are deferring most changes for another year. Under the final regulations, the electronic filing requirement and most forms changes, except for those mandated by the PPA, will become effective for all annual report filings beginning on or after January 1, 2009. The Agencies note that the vast majority of filers will now have until at least July 2010 to make any necessary adjustments to accommodate the non-PPA required changes, because annual reports generally are not required to be filed until the end of the 7th month following the end of the plan year. A special transition rule will be available for short plan year filings for 2009 plan years and DFE (Direct Filing Entity) filing for 2009 reporting years.

Revisions to Form 5500 series

The newly issued informational copies of revised forms and instructions include:

• Form 5500, Annual Return/Report of Employee Plan;
• Schedule A, Insurance Information;
• Schedule MB, Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information;
• Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information;
• Schedule C, Service Provider Information;
• Schedule D, DFE/Participating Plan Information;
• Schedule G, Financial Transaction Schedules;
• Schedule H, Financial Information;
• Schedule I, Financial Information-Small Plan;
• Schedule R, Retirement Plan Information; and
• Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan.

The key aspects of the issuance are the adoption of the Form 5500-SF, the revision of reporting requirements for 403(b) plans, the creation of separate Schedules SB and MB to replace the Schedule B to report actuarial information, the elimination of IRS-only schedules, and the expansion of fee reporting in Schedule C.

Form 5500-SF is generally available to plans that a) have fewer than 100 participants, b) are eligible for the small plan audit waiver, c) hold no employer securities, d) have 100% of assets in investments that have a readily determinable fair market value, and e) are not multiemployer plans. Most Form 5500-SF filers will not be required to file any schedules. The regulations also include a Model Summary Annual Report Notice for use by plans with fewer than 100 participants.

Special limited financial reporting rules for Code Sec. 403(b) plans are being eliminated, putting the reporting requirements of such plans on par with other ERISA-governed pension plans.

Schedule MB and Schedule SB are new actuarial information schedules required by the PPA. They replace Schedule B.

IRS-only forms and schedules are being removed from the Form 5500 Annual Return/ Report as a result of the move to a wholly electronic filing system. The removed forms and schedules include Form 5500-EZ, Schedule SSA, and Schedule E.

Schedule C is being revised to clarify the reporting requirements regarding direct and indirect compensation and fees paid to plan service providers.

Schedule R is being modified to add questions required by the PPA and needed by the PBGC to gather information on pension plan funding and compliance with minimum funding requirements effective for the 2008 plan year but filed as an attachment rather than as actual schedules. These modifications will be effective in standard format for the 2009 plan year.

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