Updated Form 5500 and Instructions Released

The Department of Labor released on Monday changes to Form 5500 for plan year 2023 reporting. Form 5500 is updated annually to account for statutory and regulatory changes affecting pension and retirement plan disclosure.

Schedule MEP for Multi-Employer Plans

A new Schedule MEP was added to consolidate reporting required by the Setting Every Community Up for Retirement Enhancement Act of 2019 and other MEP reporting into one schedule.

For 2023, questions intended to satisfy the SECURE Act’s reporting requirements for pooled employer plans and questions to link the Form PR (pooled employer registration) and the Form 5500 for each plan operated by a pooled plan provider are also found on the Schedule MEP.

Schedule R

New IRS tax compliance questions have been added to Schedule R. The changes add questions in three areas: non-discrimination testing, ADP testing and pre-approved plan letters.

Line 19a was also modified. It now requires that defined benefit plans with 1,000 or more participants at the beginning of a plan year show end-of-year distribution of assets, broken down into seven categories of plan assets.

Schedule DCG

Section 202 of the SECURE 2.0 Act of 2022 required the DOL and the IRS to modify Form 5500 to permit some groups of defined contribution plans to file a single consolidated report, referred to as Schedule DCG, for defined contribution group.

To be eligible to file the consolidated report, all plans in a group must be individual account plans with the same trustee; have the same named fiduciaries; have the same plan administrator under the Employee Retirement Income Security Act; file in the same plan year; and have the same investments or investment options available.

Small Plan Audit Participant Counting Methodology

Form 5500 and Form 5500-SF were modified to accommodate a change in the methodology for counting the number of participants in a plan for determining small plan status and an independent qualified public accountant audit waiver. For 2023, existing plans must count participants who have account balances at the start of a plan year. New plans will count participants who had account balances at the end of the year.

Schedule H Administrative Expenses

Schedule H was updated to add new categories to the “Administrative Expenses” category of the Income and Expenses section. This change is intended to provide a more detailed and transparent disclosure of plan expenses related to service providers, administration, recordkeeping, management and other sources of fees.

Schedule SB

Schedule SB was revised to include the following:

• Changes to Line 6 (target normal cost) and its instructions to address a possible, albeit unlikely, situation in which the amount reported on Line 6c would not be consistent with IRS regulations and the statute if the calculation was done in accordance with the instructions;
• A revision to the current instructions for Line 26a; and
• Changes to the current instructions for the Line 26b attachment (projected benefit payments) for situations when a plan assumes some, or all, benefits are paid in a lump sum and uses the annuity substitution rule (26 CFR 1.430(d)– 1(f)(4)(iii)(B)) to determine the funding target.

Other Changes

On Part II, Line 8a for plan characteristics, Code 3D was updated to include pre-approved 403(b) plans.

Schedule MB was revised to add notes that clarify how to report special financial assistance received by multiemployer plans.