The IRS has updated the frequently asked questions about the Form 5500 series — and did so in a manner that makes them useful for 2015 reporting.
The FAQs are as follows.
Q. For the question that asks how the 401(k) plan satisfies the nondiscrimination requirements for employee deferrals and employer matching contributions, which box should be selected if the plan uses both the design-based safe harbor method and an ADP/ACP test?
A. The IRS says to choose only the “ADP/ACP test” checkbox if the plan uses both the design-based safe harbor method and an ADP/ACP test. The IRS also says that it expects to further clarify this question and the related instructions on the 2016 Form 5500-series returns.
Q. For the question that asks if the "current year testing method" for non-highly compensated employees (NHCEs) is used in performing ADP/ACP testing for the plan year, which box should be selected if the current year testing method is used for either the ADP or ACP test, and the prior year testing method is used for the other?
A. The IRS says that one should select the “yes” or “no” checkbox based on whether or not the current year method is used in performing the ADP test. The IRS expects to further clarify this question and the related instructions on the 2016 Form 5500-series returns.
Q. If a plan meets exceptions to the coverage rules, how should one answer the question regarding how the plan satisfies the Code Section 410(b) coverage requirements?
A. The IRS says that the response should be left blank — no box should be chosen — if the plan meets exceptions to coverage rules or if the plan is a non-qualified plan. The exceptions include any of the following:
A. The IRS says to check the “N/A” checkbox if the plan doesn’t have a trust, such as 412(e)(3) fully-insured plans or certain 403(b) annuity plans.
Q. What types of in-service distributions should be reported in response to the regarding whether in-service distributions were made during the plan year?
A. The IRS says that for purposes of the 2015 Form 5500-series returns, only report:
Q. May one use the plan sponsor's EIN in place of getting a trust EIN to answer the question on trust information?
A. No. The IRS says one should use the trust EIN to report the information on the Form 5500-series returns. If there is no trust EIN, the EIN used on Form 1099-R and Form 945 may be used for this purpose. If a trust’s EIN has been deactivated, a trustee can fax a request to the EP Entity Control Unit in Ogden, Utah at (801) 620-7116 to reactivate it.
Q. How should one answer the question that asks whether a plan has been timely amended for all required tax law changes if the plan sponsor has used the IRS Employee Plans Compliance Resolution System (EPCRS) to correct the failure to amend the plan for required law changes by the applicable deadlines?
A. The IRS says that in such a circumstance, one should check “yes.”
Q. In answering the question regarding the date the last plan amendment/restatement for required tax law changes was adopted, which date should be entered for a plan that uses a pre-approved plan document and has adopted all required interim amendments but has not been restated by Dec. 31, 2015?
A. The IRS says hat one should enter the most recent adoption date of the interim amendment (disregard any discretionary amendments) that complies with required law changes. A plan sponsor must adopt an interim amendment before the end of the plan's remedial amendment cycle for a plan provision.
Q. A multiple-employer plan may file one Form 5500 to report information about the entire plan. Does the IRS require responses to the IRS compliance questions at the participating-employer level or at the plan level?
A. The IRS says that unless specified in the instructions, a multiple-employer plan generally reports information at the plan level on Form 5500 and should respond to the IRS compliance questions at the plan level.
The FAQs are as follows.
Q. For the question that asks how the 401(k) plan satisfies the nondiscrimination requirements for employee deferrals and employer matching contributions, which box should be selected if the plan uses both the design-based safe harbor method and an ADP/ACP test?
A. The IRS says to choose only the “ADP/ACP test” checkbox if the plan uses both the design-based safe harbor method and an ADP/ACP test. The IRS also says that it expects to further clarify this question and the related instructions on the 2016 Form 5500-series returns.
Q. For the question that asks if the "current year testing method" for non-highly compensated employees (NHCEs) is used in performing ADP/ACP testing for the plan year, which box should be selected if the current year testing method is used for either the ADP or ACP test, and the prior year testing method is used for the other?
A. The IRS says that one should select the “yes” or “no” checkbox based on whether or not the current year method is used in performing the ADP test. The IRS expects to further clarify this question and the related instructions on the 2016 Form 5500-series returns.
Q. If a plan meets exceptions to the coverage rules, how should one answer the question regarding how the plan satisfies the Code Section 410(b) coverage requirements?
A. The IRS says that the response should be left blank — no box should be chosen — if the plan meets exceptions to coverage rules or if the plan is a non-qualified plan. The exceptions include any of the following:
- the employer employs only highly-compensated employees (HCEs);
- no HCEs benefited under the plan at any time during the plan year;
- the plan benefits only collectively-bargained employees;
- the plan benefits all non-excludable, non-highly compensated employees of the ;employer (defined in Code Sections 414(b), (c), and (m)), including leased employees and self-employed individuals; and
- the plan is treated as satisfying the minimum coverage requirements under Section 410(b)(6)(C).
A. The IRS says to check the “N/A” checkbox if the plan doesn’t have a trust, such as 412(e)(3) fully-insured plans or certain 403(b) annuity plans.
Q. What types of in-service distributions should be reported in response to the regarding whether in-service distributions were made during the plan year?
A. The IRS says that for purposes of the 2015 Form 5500-series returns, only report:
- hardship distributions from 401(k) plans; and
- distributions from defined benefit or money purchase pension plans to employees who have attained age 62, and weren’t separated from service when the distributions were made.
- corrective distributions (such as excess deferrals, excess contributions, and excess aggregate contributions);
- distributions under EPCRS;
- deemed distributions; and
- direct rollovers of eligible rollover distributions.
Q. May one use the plan sponsor's EIN in place of getting a trust EIN to answer the question on trust information?
A. No. The IRS says one should use the trust EIN to report the information on the Form 5500-series returns. If there is no trust EIN, the EIN used on Form 1099-R and Form 945 may be used for this purpose. If a trust’s EIN has been deactivated, a trustee can fax a request to the EP Entity Control Unit in Ogden, Utah at (801) 620-7116 to reactivate it.
Q. How should one answer the question that asks whether a plan has been timely amended for all required tax law changes if the plan sponsor has used the IRS Employee Plans Compliance Resolution System (EPCRS) to correct the failure to amend the plan for required law changes by the applicable deadlines?
A. The IRS says that in such a circumstance, one should check “yes.”
Q. In answering the question regarding the date the last plan amendment/restatement for required tax law changes was adopted, which date should be entered for a plan that uses a pre-approved plan document and has adopted all required interim amendments but has not been restated by Dec. 31, 2015?
A. The IRS says hat one should enter the most recent adoption date of the interim amendment (disregard any discretionary amendments) that complies with required law changes. A plan sponsor must adopt an interim amendment before the end of the plan's remedial amendment cycle for a plan provision.
Q. A multiple-employer plan may file one Form 5500 to report information about the entire plan. Does the IRS require responses to the IRS compliance questions at the participating-employer level or at the plan level?
A. The IRS says that unless specified in the instructions, a multiple-employer plan generally reports information at the plan level on Form 5500 and should respond to the IRS compliance questions at the plan level.
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