ASPPA GAC’s Advocacy Effort Causes IRS to Delay New Form 5500 Questions

By Craig Hoffman • December 03, 2015 • 0 Comments

The final version of the 2015 Form 5500 was released on Dec. 3 and, in a victory for ASPPA GAC, the new IRS compliance questions were made optional (at least for the 2015 plan year). As has been reported in prior ASPPA Connect articles as well as ASPPA asaps, the IRS had proposed a number of new questions be added to the Form 5500 for the 2015 filing year. These question were slated to be part of a new paper Form 5500-SUP or, for those filing through the EFAST system, added to the existing form and schedules.

The proposed new questions solicited information in a number of areas including: the name and EIN of the plan’s trust; whether the plan has been timely amended for recent law changes; the date of most recent plan amendment; whether the plan had unrelated business taxable income; whether tax deductible ESOP dividends had been paid during the year; 401(k) non-discrimination compliance and general coverage testing. In addition, the naming of the paid preparer of the form was to become mandatory question that must be answered if it applied.

The IRS proposed the new questions in a filing published in the Federal Register on Dec. 23, 2014. ASPPA GAC filed an IRS comment letter with respect to the December notice in February of this year.

Our letter suggested a number of ways that the collection of the new information could be done in a more efficient and less burdensome manner. Most importantly, ASPPA GAC’s letter recommended that the new questions be delayed for at least a year to give service providers the time to update systems. As stated in the letter, “This [delay] is absolutely necessary to minimize the burdens of collection and will enhance the quality, utility and clarity of the information that will be collected.”

After consideration of the comments that were received, the IRS filed their draft of the 2015 form with the White House Office of Management and Budget (OMB) on May 8th. To the surprise of ASPPA GAC, no changes had been made from the draft published in the Federal Register last December, including the 2015 plan year effective date.

In considering the draft, OMB’s job was to review whether the IRS had complied with the Paperwork Reduction Act which requires federal agencies to consider the burdens and costs placed on the private sector when the government collects data that requires the submission of paperwork, such as the Form 5500. ASPPA GAC filed another comment letter, this time with OMB, taking issue with the IRS estimate of the extra time and expense that would be caused by collecting data to answer the new questions. In addition, a face to face meeting was held with OMB on July 14 in which ASPPA GAC once again requested a delay in the effective date to reduce the costs of compliance by giving service providers more time to update systems.

Since the face-to-face meeting, the assumption is that OMB considered ASPPA GAC’s comments and ultimately came to the conclusion that we were right; that is, there was no pressing reason to add these new questions in such a rushed fashion. The Dec. 3 release of the final 2015 forms shows that ASPPA GAC’s advocacy efforts got results, thanks to the hard work of our volunteers and staff members.

Without question, two individuals who spearheaded this effort and deserve credit for its success were Janice Wegesin and Peter Gould, along with the hardworking members of the ASPPA GAC Subcommittee on Reporting and Disclosure who composed the original comment letter and provided support along the way. Also noteworthy were the efforts of the members of ASPPA’s Business Owners and Managers Council (BMOC) who wrote individual letters to OMB as well as to their members of Congress asking for a delay. And last, but not least, Andy Remo, our Director of Legislative Affairs, who endured countless meetings on Capitol Hill with staffers and members of Congress whose eyes glazed over when forced to consider the nuances of filing a Form 5500. But those meetings resulted in a number of letters to OMB by influential members of Congress and all of these efforts together tipped the scales in our favor.

ASPPA members can help our GAC efforts by joining GAC and/or making a contribution to the ASPPA Political Action Committee. You can find more information at the ASPPA GAC Advocacy webpage here.

Craig P. Hoffman, APM, is General Counsel, American Retirement Association.