Big Changes Coming to Form 5500

In February 2023, the U.S. Department of Labor, Internal Revenue Service and Pension Benefit Guaranty Corporation released Federal Register Notices announcing changes to the 2023 Form 5500 Annual Return/Report of Employee Benefit Plan. The most significant changes include:

• Changes to the participant count methodology for determining the 100-participant threshold for filing as a small plan. For plan years beginning on or after January 1, 2023, the number of eligible participants will be based on the number of participants with account balances. Employees who are eligible to participate but have not elected to do so will no longer be included in the count (unless they have an account balance). You should consult with your third-party administrator to determine the proper count for your plan. For many plans that previously filed as a large plan, this will mean they can file as a small plan for 2023, and as a result will not need an audit.
• A consolidated Form 5500 can now be filed for a new type of direct filing entity called Defined Contribution Retirement Plan Groups (DCGs). Schedule DCG listing individual plan information will be required. Individual plans in the group that are large plans (by definition) will still be subject to a separate plan-level audit by an independent qualified public accountant.
• Improved reporting for MEPs (Multiple Employer Plans) by adding a new Schedule MEP (Multiple-Employer Retirement Plan Information), which will also include PEPs (Pooled Employer Plans) as a new plan type.
• Additional breakout categories for administrative expenses on Schedule H to improve fee transparency.

For more detail on these and other changes to Form 5500, read the U.S. Department of Labor’s Fact Sheet here. If you are unsure how this impacts your plan or have any questions, please contact us and we will help you navigate your situation.