Recently, the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) announced guidance and relief (Field Assistance Bulletin 2019-01) affecting Form 5500 annual report submission for multiple employer plans (MEPs). The relief applies to any MEP that, in plan years 2014 – 2017, failed to submit with its Form 5500, a list of participating employers in the MEP, and a good faith estimate of the percentage of total contributions to the MEP made by each participating employer during the plan year.
In 2014, by interim final rule, the DOL amended the Form 5500 Annual Return/Report of Employee Benefit Plan, and the related Instructions, to administer the newly enacted ERISA section 103(g) requiring MEPs to report a list of participating employers with their EINs, and a good-faith estimate of the percentage of each employer’s total contributions (including employer and participant contributions) in relation to the total contributions made by all participating employers during the applicable year. The Interim Rule also noted that certain sponsor pay-all and/or fully insured welfare plans are not required to report the estimate of employer contributions.
The interim rule clarified that the reporting requirement applies to retirement MEPs as well as welfare MEPs such as plan MEWAs sponsored by employer groups or associations (more recently described by DOL regulation as Association Health Plans or AHPs). The Interim Rule also defines the term “participating employer” to mean employers obligated to contribute to the MEP, employers who made contributions to the MEP, or employers whose employees were covered by the MEP.
According to FAB 2019-01A, a recent review by the DOL of Form 5500 data found that some MEPs, including those sponsored by professional employer organizations (PEOs), have not properly included a complete and accurate list of participating employers and other required information with the Form 5500.
In light of the possibility that some plan fiduciaries misunderstood the annual filing requirements, the DOL indicated in FAB 2019-01A that temporary transition relief will be provided to MEP plan administrators who voluntarily begin filing complete and accurate participating employer information.
Specifically, the DOL announced that it will not reject a Form 5500 or Form 5500-SF filed on behalf of a MEP for the 2017 plan year, or any prior plan year, or seek to assess civil penalties against the plan administrator with respect to such filings, solely because the plan administrator failed to file these annual reports in compliance with ERISA Section 103(g) as implemented by the DOL, provided that the annual reports filed for the MEP for the 2018 and following plan years include the necessary complete and accurate employer information, as provided on the Form 5500 and its Instructions.
Extension of July 31, 2019 Filing Deadline
Due to the July 31, 2019, filing deadline for Form 5500 and Form 5500-SF for calendar year plans, the DOL is granting MEPs a special filing extension of up to two and a half months to file a compliant 2018 annual report. MEPs seeking this extension should check the “special extension” box under Part I, Line D on the 2018 Form 5500 or 5500-SF and enter “FAB 2019-01” as the description.
MEPs using this special extension do not need to file a Form 5558 with the IRS. MEPs that already filed their 2018 Form 5500 or 5500-SF may still receive the transition relief offered by FAB 2019-01 by filing an amended compliant annual report by October 15, 2019.
Plan administrators of MEPs need to carefully review annual reports that they have submitted since the 2014 plan year, to determine if the plan failed to comply with the Form 5500 requirements implementing ERISA section 103(g). If so determined, they should consider availing themselves of the transition relief outlined in the FAB.
Plan administrators who have filed or are preparing to file the Form 5500 or 5500-SF for their plan’s 2018 plan year, should review the special filing extension of the FAB.
If you have any questions regarding annual reporting requirements for MEPs and the interim relief described in this alert, please do not hesitate to contact Susan Elizabeth Rees or Seth Gaudreau at 202-969-2800.