DOL Releases New Form 5500 Instructions | Chief Investment Officer

The Department of Labor announced changes to Forms 5500 and 5500-SF (short form) and released updated instructions on December 8.

The DOL updates Form 5500 annually to keep it up-to-date with various regulatory changes. Every defined contribution and pension plan sponsor is required to file a 5500 to the IRS and DOL annually. The form discloses information about a plan’s finances and operation. 5500s are required under Title I and IV of the Employee Retirement Income Security Act of 1974 and are used both to ensure compliance by and to gather data on pension plans.

Form 5500 received changes in five areas: multiple employer plans, administrative penalties, Schedule MB, Schedule R and Schedule SB.

For MEPs, new codes have been added to Line 8a of Part II to identify different types of MEPs, such as pooled employer plans, association retirement plans, professional employer organization MEPs and other MEPs. For administrative penalties, the instructions have been updated to reflect an increase in the maximum civil penalty amount assessable under ERISA.

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For Schedule MB, used by multiemployer defined benefit plans and certain money-purchase plan actuarial information, instructions for Line 3 have been changed to require an attachment that shows total withdrawal liability payments made to the plan while separating periodic and lump sum withdrawals. Line 8b(1) was updated to increase the projection period in the attachment to 50 years for plans with 1,000 or more participants. Line 8b(3) has been changed to require plans with 1,000 or more participants to attach a 10-year projection of employer contributions and withdrawals.

For Schedule R, for Line 13 of Part V was changed to require plans to report identifying information about any participating employer who either contributed more than 5% of the plan’s total contributions or was one of the 10 highest contributors.

For Schedule SB, Line 26 of Part VI now requires an attachment of a projection of expected benefit payments.

Form 5500-SF received changes to two areas: MEPs and administrative penalties. The changes to penalties are the same for 5500-SF as they were for 5500.

The changes to MEPs differ slightly. New plan codes have been added for the plans eligible to fill out a 5500-SF: association retirement plans, PEO MEPs and other MEPs. A caution note has been added to signal that pooled employer plans are not eligible to file Form 5500-SF.

Tags: Form 5500, MEPs, United States Department of Labor (DOL)

The U.S dollar had been on a tear since 2021—when a ballooning American stock market attracted foreign investors—and through much of this year, amid international instability that highlighted the greenback’s refuge status.

But that advance has reversed lately, given worries about higher inflation and a possible recession besetting the world’s largest economy: While the buck is still up 16% since January 2021 against a basket of other major currencies, it has slid 9.5% since its peak in September. This is important to allocators and other investors with foreign holdings, as a strong dollar crimps their performance when translated into U.S. money.

The dollar downturn is temporary, say the sages at BCA Research. The U.S. Dollar Index, which tracks the denomination, is almost at 105, and the firm believes it is entering a volatile trading pattern for the next three months or so. On the other hand, the dollar will not go any lower than 102, nor any higher than 109 in that period, the BCA report contends.

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During the three-month spell, ever-higher U.S. interest rates will pull down the nation’s stock market and harm its economy, BCA predicts. Indeed, the report states, That overseas investment money, of course, is needed to pull up the dollar.

If a recession arrives in the U.S., which many expect in the coming year, the Federal Reserve will have more leeway to cut interest rates than its counterparts in Europe and Japan, which have lagged behind in tightening. Once the Fed eases rates, happy days will be here again for the dollar, the researchers say.

The BCA note declares: “Once we have clarity on 1) a bottom in global growth, 2) easing geopolitical tensions and 3) lower interest rates from the Fed, the dollar will peak. … This secular peak in the dollar will be supported by the most expensive valuation in decades, a consensus that remains very much bullish.”

It’s that interim period, essentially 2023’s next quarter, when things will be tricky, in BCA’s view. Next year, the best currency trade likely will be to short the euro and the Japanese yen, which should dip in relation to the buck, per BCA. Aside from the dollar, the best currencies to go long on are from oil-producing countries. Presumably, that implies that oil will reverse its current downtrend. BCA’s top pick: the Norwegian krone.