The 2015 Form 5500: Should Filers Skip the Optional Questions?

“Just skip those optional questions,” says Form 5500 expert and author Janice M. Wegesin, who has been getting daily inquiries for her opinion as to whether filers should complete the new compliance questions that appear on the 2015 Form 5500. While the “optional” nature of a number of items is notably inconspicuous on the face of the 2015 Form 5500 series reports, the official 2015 Instructions for Form 5500 make clear that completing certain lines is not required.

Larry Starr, whose Massachusetts-based pension consulting firm serves more than 500 tax-qualified retirement plans, agrees. “We have not been able to determine a single advantage to completing any of the optional items,” he noted, adding: “If providing additional, non-required information results in an audit or even an inquiry from the IRS, why on earth would you want to take such an unnecessary risk?”

As though to validate Starr’s observation, just last week the IRS unleashed a flurry of letters to plans/trusts seeking late Form 945 filings, some as far back as 2009. In many instances, the entity only recently applied for an Employer Identification Number (EIN) in anticipation of being required to complete certain lines on the 2015 forms. Form 945 is used to report income tax withholding associated with benefit payments from a retirement plan/trust and paid over to the U.S. Treasury. In fact, because many of the targeted EINs were only recently assigned to a trust, it was impossible for that EIN to be associated with any income tax withholding for prior years.

ASPPA’s Government Affairs Committee put forth many suggestions during 2015 in an effort to work with the IRS to improve the questions and instructions, but also to delay the requirement. ASPPA sent letters to the IRS in February and September, and to the Office of Management and Budget in June.

The following items are optional for 2015 plan year filings:

Form 5500 and its Schedules