ARA Files Comment Letter on Form 5500 Compliance Questions
On Feb. 22, 2016, the American Retirement Association (ARA) filed a comment letter
with the IRS regarding the new compliance questions to be added to the Form 5500, potentially for the 2016 plan year reports.
In the letter, the ARA requested a meeting with the IRS to collaborate on how to make the questions less complex, burdensome and confusing while still collecting the best data possible.
The letter notes that the ARA “appreciates the recent IRS announcement that plan sponsors should not complete the compliance questions that were added to 2015 Forms 5500-EZ and 5500-SF, and to Form 5500 Schedules H, I and R,” and that the ARA had expressed concern about those compliance questions, as well as the new proposed Form 5500-SUP.
The letter notes that service providers and plan sponsors already have expended considerable effort and resources in preparing to respond to the new 2015 compliance questions. It adds that it was unclear that the compliance questions were not mandatory until the final instructions for the 2015 forms were released in early December. And it terms the recent IRS announcement that the questions should not be completed “the latest twist in this saga that has been ongoing since the draft questions were first released in December 2014.”
The letter says that the ARA “remains very concerned” since the IRS had previously indicated in FAQs on the “5500 Corner” website — which are now removed — that revisions are being made to the new questions and instructions. The revisions were said to be slated to be effective for 2016 plan year reports. Once again, says the letter:
- plan sponsors, practitioners and software providers do not know what data should be collected and maintained for a plan year that is underway; and
- the burdens of collection are being unnecessarily increased by this lack of certainty as to what will be required to be reported on the 2016 form.
Not only that, says the letter, the IRS “has not engaged in any meaningful dialog with stakeholders other than the formal notice and comment letters that were filed over a year ago.”
The ARA, says the letter, “believes it is important that the process and timing of any revisions to the compliance questions and instructions take into account the realities faced by the industry in shifting resources,” including the need to develop, test and implement changes to technology, communication and procedures.
Furthermore, the ARA “continues to urge the IRS to consider the processes described in OMB’s Aug. 9, 2012 memo regarding Testing and Simplifying Federal Forms” and “strongly recommends that any future compliance questions be effective a reasonable period of time after questions and instructions are finalized.”
Because of the considerable time and expense involved in responding to new compliance questions, “ARA respectfully requests a meeting with the IRS to collaborate on how to make the collection less complex, burdensome, and confusing, and to ensure that the agency collects the best data possible. We also continue to believe that any new questions should be delayed to and folded into the revisions the Department of Labor has announced they will be making in conjunction with their ‘modernization’ efforts,” the letter concludes.