Agencies Release Final Rule on Changes to 2023 Form 5500, Form 5500-SF

Last week, the U.S. Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) released their final rule bringing changes to the 2023 Form 5500, Annual Return/Report of Employee Benefit Plans and Form 5500-SF Short Form. The final rule is the last phase to fully implement the agencies’ 2021 proposed regulations on Form 5500. Changes to the 2023 Form 5500 Series affect annual reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC). In May 2022, the agencies released their previous final rule on Form 5500 to improve reporting on the actuarial and retirement plan schedules.

Form 5500 Series Return/Report

Together with the IRS and the PBGC, the DOL developed the Form 5500 series return/report to allow employee benefit plans to satisfy annual reporting requirements under Title I and Title IV ERISA and the IRC. ERISA sets minimum standards for most voluntarily established retirement and health plans in private industry. Specifically, ERISA provides protection for individuals in these plans. The Form 5500 series return/report assures that employee benefit plans operate in accordance with certain prescribed standards. Additionally, it ensures that participants, beneficiaries, and regulators have access to sufficient information about their rights under employee benefit plans. Forms 5500 are among the five types of employee records all employers must keep.

Background of the 2023 Form 5500 Final Rule

In the first and second phases of implementation, the agencies published the abovementioned Federal Register notices in December 2021 and May 2022, respectively. These notices announced changes to the 2021 and 2022 Form 5500 Series Returns/Reports. The recent final rule signaling phase three brings changes to and includes a Notice of Final Forms Revision concerning the 2023 Form 5500 Series Return/Report.

Changes to the 2023 Form 5500 and Form 5500-SF

According to the Assistant Secretary for Employee Benefits Security Lisa M. Gomez, “The [2023 Form 5500 Series] changes and regulatory amendments, especially those on multiple-employer plan reporting, improve the Form 5500 as a critical oversight, public disclosure and policy data tool.” Changes announced in the recent final rule include:

• consolidated Form 5500 reporting;
• changes to participant counting when determining eligibility for simplified reporting alternatives available to small plans (fewer than 100 participants);
• improvements to financial and funding reporting by PBGC-covered plans;
• additional IRC information to improve retirement plan tax compliance and oversight; and
• reporting on administrative expenses paid by the plan on the plan’s financial statements.

In addition, the agencies adjusted the final rule to address provisions under the Securing a Strong Retirement Act of 2021 (SECURE 2.0 Act). Specifically, adjustments affected Code section 403(b) multiple employer plans, including pooled employer plans, minimum required distributions, and audit requirements for plans in defined contribution group reporting arrangements. The agencies estimate that changes to the 2023 Form 5500 Series will reduce overall filing costs for employee benefit plans by $95 million annually. The 2023 reports will be filed beginning July 2024 for calendar year plans.