Pension & Benefits News 2018 Form 5500 annual return/report series issued
Wednesday, November 28, 2018

2018 Form 5500 annual return/report series issued

By Pension and Benefits Editorial Staff

The Employee Benefits Security Administration (EBSA), the IRS, and the Pension Benefit Guaranty Corporation (PBGC) have issued advance informational copies of the 2018 Form 5500 annual return/report, related instructions and schedules, and 2018 Form 5500-SF and instructions. The advance copies cannot be used to file a 2018 form. Plans should file Form 5500 or Form 5500-SF electronically using the EFAST 2 system.

Administrative penalties. The instructions for 2018 Forms 5500 and 5500-SF have been updated to reflect an increase in the maximum civil penalty amount assessable under ERISA Sec. 502(c)(2), as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (P.L. 114-74). The maximum penalty was increased to $2,140 a day for a plan administrator who fails or refuses to file a complete or accurate Form 5500 report. The increased penalty under Sec. 502(c)(2) is applicable for civil penalties assessed after January 2, 2018, whose associated violation(s) occurred after November 2, 2015 - the date of enactment of the Act.

The instructions note that filers should check for any further inflation adjustments because the penalty amounts are adjusted after the Forms 5500 and instructions are issued.

Plan characteristics. The plan characteristic, 3D, has been updated for Form 5500 (Lines 8a and 8b) and Form 5500-SF (Lines 9a and 9b) to reflect the IRS changes for pre-approved plans, as prescribed in Rev. Proc. 2017-41.

Principal Business Activity Codes. The Principal Business Activity Codes have been updated to reflect certain updates to the North American Industry Classification System (NAICS) for Forms 5500 and 5500-SF.

Schedule MB. The instructions for Line 3 (concerning contributions made to the plan for the plan year) have been modified to require an attachment in situations where a reported contribution includes a withdrawal liability payment. In addition, the instructions for Line 4f (where plans expected to become insolvent or emerge from troubled status report the year in which such insolvency or emergence is expected to occur) have been modified to require an attachment providing additional information about how that year was determined. In addition, the instructions now include guidance about what to report if a troubled plan is neither projected to emerge from critical status nor become insolvent within 30 years.

Schedule SB. Line 23, where filers check a box to indicate which set of mortality tables is used, has been updated to provide additional options available under IRS Reg. §1.430(h)(3). The instructions for Line 23 have been modified to reflect this change.

In addition, Schedule SB has been updated to reflect the issuance of Rev. Proc. 2017-56 with respect to change in funding methods. Line 23 has been updated to reflect final regulations prescribing mortality tables to be used by most defined benefit pension plans. For Line 27 (concerning plans that are subject to alternative funding rules), Codes 5 and 8 are no longer applicable and should not be used. Lines 42 and 43 have been removed because, pursuant to the Pension Relief Act of 2010 (P.L. 111-192), there are no installment acceleration amounts or installment acceleration amount carryovers after the 2017 plan year.

Schedule R. Schedule R has been updated to reflect the issuance of Rev. Proc. 2017-56 with respect to the change in funding methods. Also, the Schedule R instructions under “Who Must File” have been updated to reflect the removal from Schedule R of certain IRS compliance questions.

Form 5500 - welfare plans. The instructions for Lines 5 and 6 (concerning the number of plan participants) have been enhanced to make it clearer that welfare plans complete only Line 5 and elements 6a(1), 6a(2), 6b, 6c, and 6d in in Line 6.

SOURCE: 2018 Form 5500, instructions, and schedules, as well as 2018 Form 5500-SF and instructions.

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