Substantial Changes to Form 5500 Reporting Proposed

The Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) (collectively the "Agencies") have proposed substantial changes to the Form 5500 reporting requirements. The proposal is contained in a Notice of Proposed Rulemaking found at this link. Correspondingly, DOL issued conforming proposed amendments to its regulations, found at this link. The proposed changes reflect the Agencies' efforts to improve and modernize employee benefit plan reporting for filers, the public, and the Agencies. The changes generally would be effective for plan years beginning in 2019, with filings due in 2020. This Alert provides a summary overview of the proposed changes.

Action Needed Now: Plan sponsors should understand the impact of the proposed changes and decide whether they want to submit comments to the agencies.

Comments are due by October 4, 2016 and must include both the Agencies' names and Regulatory Identifier Number (RIN 1210-AB63) in the subject line. They can be submitted using one of the following methods:

  • Federal eRulemaking Portal at:
  • Email: at
  • Mail: Office of Regulations and Interpretations, Employee Benefits Security Administration, Attn: RIN 1210-AB63; Annual Reporting and Disclosure, Room N-5655, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210.
  • Hand Delivery/Courier: Office of Regulations and Interpretations, Employee Benefits Security Administration, Attn: RIN 1210-AB63; Annual Reporting and Disclosure, Room N-5655, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210.


The Internal Revenue Code and the Employee Retirement Income Security Act of 1974, as amended (ERISA) generally require pension and other employee benefit plans to file annual returns/reports concerning, among other things, the financial condition and operations of the plan. Such annual reporting requirements are satisfied by filing the Form 5500 Annual Return/Report of Employee Benefit Plan or a Form 5500-SF Annual Return/Report of Small Employee Benefit Plan, together with any required attachments and schedules through the ERISA Filing Acceptance System (currently EFAST2).1

The Notice's proposed modifications to the Form 5500 requirements result from the Agencies' comprehensive review of the current Form 5500 reporting system and are coordinated with the contract renewal for EFAST2. In addition to the Agencies' desires to make the information more useful for research and enforcement, revisions to the Form 5500 were necessary to reflect various statutory enactments since the last major changes to the 5500 forms and instructions, including Affordable Care Act (ACA) requirements for group health plans.2


The proposed changes would require sponsors to report detailed information about the financial management of plans (including information on alternative investments, hard-to-value assets, and investments through collective investment vehicles).

The DOL's proposed rule would update the requirements for certifications for limited scope audits and enhance the DOL's ability to review limited scope audits. In addition, for purposes of the examination and report of an independent qualified public accountant, the rule would allow a plan to exclude any statement or information regarding plan assets held by banks, similar institutions, or insurance carriers if such statement or information is prepared and certified by the bank, similar institution, or insurance carrier.

Highlights of Major Changes

Below we discuss highlights of the major changes that are proposed. However, we note that the Form 5500 and all of the schedules thereto have some changes proposed.

  • New Group Health Plan Reporting Requirements - Schedule J: ERISA-covered group health plans would be required to file the new Schedule J,3 which would require sponsors to report extensive information about plan characteristics, including but not limited to the following:
    • The type of group health benefits offered under the plan, the number of participants and beneficiaries covered, whether the plan claims grandfathered status, and the number of persons offered and receiving coverage through COBRA;
    • Whether the plan includes a flexible spending account (FSA) or health reimbursement account (HRA);
    • Whether the plan received rebates, refunds, or reimbursements from a service provider such as a medical loss ratio rebate under the ACA or offset rebates from favorable claims experience;
    • Group health plans that are not required to complete a Schedule H, (i.e., fully insured, unfunded plans, or combination insured/unfunded plans) would be required to report information regarding received or receivable employer, participant, and other contributions (including non-cash contributions) on the Schedule J and the total of all contributions;
    • Whether there was a failure to timely transmit participant contributions to the plan;
    • Detailed claim information, including the number of claims submitted during the plan year, the number approved or denied, whether any claims were not adjudicated within the required timeframes, whether the plan was unable to pay any claims, and the total dollar amount of claims paid during the plan year;
    • Whether the plan's summary plan description (SPD) and summaries of any material modifications (SMM), and summary of benefits and coverage (SBC) are in compliance with the applicable content requirements; and
    • Whether the plan complies with applicable federal laws and DOL's regulations, including ERISA, HIPAA, the Genetic Information Nondiscrimination Act, the Mental Health Parity Act, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, the Newborns' and Mothers' Health Protection Act, the Women's Health and Cancer Rights Act, Michelle's Law, and the ACA.4


The extensive scope of information required under new Schedule J will require additional recordkeeping by ERISA-covered group health plans and likely increase administrative costs.

  • Changes to Financial Reporting for Small Plans (fewer than 100 participants): The proposal eliminates the current exemption from Form 5500 reporting for small insured and self-insured (i.e., unfunded) welfare benefit plans. Under the proposal, all ERISA-covered group health plans (including grandfathered plans and retiree-only plans), regardless of size, and regardless of whether funded with a trust, unfunded, or a combination unfunded/insured, would be required to file a Form 5500 Annual Return/Report, including the new Schedule J (Group Health Plan Information), as well as any other applicable schedules. However, small, fully insured group health plans only would have to answer a limited number of questions on the Form 5500 and the new Schedule J. The current exemptions from financial reporting on Schedule H, G, and C for insured plans, unfunded plans, and plans that are combination of unfunded/insured would continue to apply for all welfare plans, including group health plans, regardless of size. The current exemption from financial reporting on Schedule G for welfare plans that cover fewer than 100 participants would also continue to apply.


Sponsors of small ERISA-covered group health plans that have long enjoyed exemption from the Form 5500 reporting requirements that would have to comply with the proposed reporting requirements beginning with the 2019 plan year may well wish to make comments to the Agencies.

  • Revisions to Schedule C: Schedule C would be changed to require reporting of indirect compensation only for "covered" service providers and for compensation that is required to be disclosed pursuant to DOL regulations. Another key change would be the elimination of the reporting concept of "eligible indirect compensation." The proposal would add a question asking whether the service provider arrangement includes recordkeeping services to a plan without explicit compensation for some or all of such recordkeeping services or with compensation for such recordkeeping offset or rebated in whole or in part based on other compensation received by the service provider, or an affiliate or subcontractor. If so, Schedule C would require a dollar figure of the amount of compensation the service provider received for recordkeeping services. In addition, the proposal requires a separate Schedule C for each service provider.

  • New Information on Employer Matching Contributions, Employee Participation Rates, and Plan Design for Defined Contribution Pension Plans: The Agencies are proposing changes to collect better information on pension plan coverage and performance of individual account plans, focusing on participant directed defined contribution pension plans. The proposed regulation would add new questions to the Form 5500, Form 5500-SF, and Schedule R to request information on participation, contributions, asset allocation by age, participant-level diversification, catch-up contributions, default investment alternatives, the distribution of entire account balances, the number of participants with account balances at the beginning of the year and terminated participants.

  • Revisions to Schedule H: The assets and liabilities entries would be revised to provide specific categories for investments so that different investments would not be lumped together as permitted under the current Schedule H. This would enable more accurate and detailed reporting on the types of assets held by a plan, including alternative investments, hard-to-value assets, and investments through collective investment vehicles. The income and expense elements would be expanded to identify different types of income or expense.
  • In addition, questions on the termination of the accountant, enrolled actuary or other service provider will be moved to Schedule H. The Schedule H would expand on the questions relating to plan termination and will ask whether the plan has adopted a resolution to terminate, and if so, the effective date of plan termination, the year in which assets were distributed to plan participants and beneficiaries, and whether the plan transferred assets or liabilities to another plan. Filers would be asked to indicate whether another plan transferred assets or liabilities to the reporting plan (other than direct rollovers) and to provide the date and type of transfer (merger, consolidation, spinoff, other). For a defined contribution pension plan that terminated and transferred plan assets to a financial institution and established accounts in the name of missing participants, Schedule H would ask for the name and EIN of the financial institution, the date the assets were transferred to the institution, the number of accounts established, and the total amount transferred.

  • Revisions to Schedule G: Schedule G would be revised to require more uniform and detailed information on loans, fixed income obligations, leases in default, swaps/options and derivative transactions that otherwise have been generically reported as loans or fixed income obligations in default or as uncollectible. This change will help identify issues of default, uncollectibility, or conflicts of interest transactions with respect to these types of hard-to-value assets.

  • Re-introduction of Schedule E to Improve Information on ESOPs: Removed from Form 5500 in 2009, the agencies propose to bring back a revised Schedule E that will include some of the questions from the pre-2009 Schedule E, revisions to other questions, and additional new questions with respect to employee stock ownership plans (ESOPs). The questions will be divided into sections based on whether stock was acquired by a securities acquisition loan, whether it is readily tradable on an established securities market, and whether the ESOP has an outstanding securities acquisition loan. The current questions related to ESOPs on Schedule R would be deleted.

  • Schedules MB and SB Slightly Revised: The proposed changes would require more information with respect to the age and service of participants to be reported directly on the actuarial schedules (Schedules MB and SB). The actuary would have to report data separately for active participants, terminated vested participants, and retirees and beneficiaries in pay status on the forms rather than in an attachment. Furthermore, the actuary would have to report on the form the expected benefit payments for the next 10 years assuming no additional accruals. (Currently, this is an attachment to the Schedule MB but not the Schedule SB.)


Collectively the proposed changes, which will require small group health plans to file Form 5500s; plan sponsors to self-report compliance with applicable law; and more detailed plan, financial, and investment information, will, if implemented, require changes by the preparers of the forms and increased expense for many.

Cheiron consultants can help you understand the impact of the proposed Form 5500 reporting changes and information requirements.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.

1 EFAST2 is the wholly electronic system operated by a private-sector contractor for the processing of Form 5500 Annual Return/Report.

2 In addition, the proposed changes implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, statutory changes to ERISA and the Code relating to defined benefit pension plans in the Moving Ahead for Progress in the 21st Century Act (MAP 21); the Cooperative and Small Employer Charity Pension Flexibility Act (CSEC Act), the Highway and Transportation Funding Act (HATFA), the Multiemployer Pension Reform Act of 2014 (MPRA), and various regulatory actions adopted by the Agencies since the last major changes to the forms and instructions, including the DOL's final regulations at 29 CFR 2550.404a-5, 404c-5, and 408b-2.

3 Group health plans that are part of a group insurance arrangement (GIA) would not be required to file the Schedule J, however the Form 5500 filed by the GIA would have to include a separate Schedule J for each group health plan participating in the GIA.

4 Note, Schedule J would not cover the shared responsibility provisions under Code ยง 4980H of the Code that employers report on Forms 1095-C and 1094-C.