ASPPA GAC Files Comment Letter on Form 5500-SUP

By ASPPA Net Staff • June 11, 2015 • 0 Comments
ASPPA’s Government Affairs Committee (GAC) on June 8 filed comments with the Office of Management and Budget (OMB) to express concern about the IRS estimates of the cost burdens reported to OMB associated with new questions on the 2015 Form 5500 series, including the new Form 5500-SUP. ASPPA GAC earlier had sent a comment letter to the IRS concerning the notice of proposed expanded data collection and revisions to the Form 5500 series and the Form 5500-SUP.

ASPPA agrees with the IRS’ assumption that few filers will provide the SUP data utilizing a paper filing but instead will answer the new questions using the existing EFAST filing system. That, HOWEVER, is where ASPPA’s agreement with the IRS ends.

ASPPA questions the validity of the time and cost burden the IRS presented in its submission because the IRS does not appear to account for the additional time needed to collect and report the SUP data if it is part of the electronically filed Form 5500 series. The IRS estimated in its filing with OMB that there would be no increase in those burdens.

ASPPA, in its letter, asserted that the burdens associated with the new SUP data collection have been materially understated — and that this will have a direct impact on plan participants. ASPPA argues that based on the IRS’ estimates of how many filers will report the SUP data, at a $100 per hour billing rate, it would cost more than $1 billion per year to provide the SUP data — and that plan participants and beneficiaries will bear most of that.

Further, ASPPA argues that this burden will fall especially hard on small businesses, contrary to what the IRS suggests. It points out that the IRS itself estimates that nearly 80% of the filings will come from small entities. And not only does the IRS not recognize any added burdens due to the new questions, it’s filing with OMB represents that the new forms will reduce the burden on small entities — a conclusion ASPPA disputes.

ASPPA believes the changes that have been proposed will entail added and significant burdens on service providers. The basis for this belief is that the IRS did not account for the fact that the SUP data generally involves information that is not currently being maintained in a format readily accessible for input into the Form 5500 series. The letter points out that the new information has either never before been required to be reported, or has not been required since 2004. In addition, coordination or integration of recordkeeping systems, accumulation of information from other providers and development of a mechanism to gather data that is not currently being tracked will be necessary.

And it will take time for service providers to respond to such a change, ASPPA notes. Service providers generally do not gear up for systems changes based on a draft of proposed changes; rather, they generally wait until final forms and instructions are issued. After that, it generally takes 6-12 months for the necessary capital investments to be approved and technology, communication and procedure changes to be developed and implemented.

Despite these potential effects on service providers, ASPPA’s comment letter notes that no official guidance is yet available to the public which would allow service providers to take action to facilitate the SUP data initiative.

Further exacerbating the situation is that service providers are now devoting staff and resources to the restatement of defined contribution plan documents in order to meet the IRS-imposed deadline of April 30, 2016. This, ASPPA argues, “severely limits the resources that might otherwise be available and will further delay the industry’s ability to effectively respond to the SUP data collection requirements.”

ASPPA argues that service providers need adequate time to put sufficient mechanisms in place to respond to this initiative, and that the implementation of these changes should be delayed until at least the 2016 plan year. Not only that, a later effective date would also provide additional time for the IRS to incorporate input from stakeholders, refine and enhance the SUP data, and provide clear and accurate instructions.

ASPPA also requested a meeting with OMB to further discuss the matter.