29 CFR 2520.104-44: Simplified Pension Plan Reporting
Understand the ERISA regulation for simplified annual reporting. This guide covers the specific requirements for small pension plans to file using Form 5500-SF.
The Department of Labor’s regulation, 29 CFR 2520.104-44, provides a simplified annual reporting method for certain small pension plans under the Employee Retirement Income Security Act of 1974 (ERISA). This provision is designed to reduce the administrative burden on small businesses by allowing them to file a less complex annual return. Instead of the standard Form 5500, eligible plans can use Form 5500-SF, the “Short Form” for small employee benefit plans.
Eligibility for Simplified Reporting
To qualify for the simplified reporting offered under 29 CFR 2520.104-44, a pension plan must satisfy several distinct conditions. The most fundamental requirement relates to the number of participants. A plan must have covered fewer than 100 participants on the first day of the plan year to be considered for this option.
A central condition for eligibility revolves around the nature of the plan’s investments, which must consist entirely of “eligible plan assets.” These are assets that have a readily determinable fair market value. Such assets must be held by regulated financial institutions like banks, insurance companies, or registered broker-dealers.
Examples of qualifying assets include mutual funds, publicly traded stocks held by a brokerage, and investment contracts with insurance companies that provide annual valuation information. Conversely, assets that are difficult to value are not permitted. This would include investments such as real estate, collectibles like art or coins, and private or limited partnerships. The plan is also prohibited from holding any employer securities.
Another condition is that the plan must be eligible for a waiver of the annual audit requirement by an independent qualified public accountant (IQPA). This waiver is detailed in regulation 29 CFR 2520.104-46. Finally, the simplified filing option is not available to multiemployer plans, which are plans maintained by more than one employer, typically under a collective bargaining agreement.
Required Information and Documentation
The primary document for this simplified method is Form 5500-SF, “Short Form Annual Return/Report of Small Employee Benefit Plan.” The most current version of this form and its instructions can be obtained from the official websites of the Department of Labor (DOL) or the Internal Revenue Service (IRS).
Completing the Form 5500-SF requires a range of specific details about the plan. The administrator will need to provide identifying information for the plan sponsor and the plan administrator, including their names, Employer Identification Numbers (EINs), and addresses. Data on plan participants is also required, which involves reporting the number of active employees, retired or separated individuals receiving benefits, and other separated participants entitled to future benefits.
Financial information is a significant component of the form. This includes reporting the total value of plan assets and liabilities at the beginning and end of the plan year, as well as detailing the plan’s income and expenses for the year. The administrator must also provide information regarding the plan’s fidelity bond and enter specific plan characteristics codes that describe the type of benefits offered.
After the Form 5500-SF is prepared but before it is filed, the administrator must prepare a Summary Annual Report (SAR) to be distributed to all plan participants. The SAR is a narrative summary of the financial information contained in the Form 5500-SF. It must inform participants about administrative expenses, the amount of benefits paid, and the total value of plan assets, and it notifies them of their right to receive a full copy of the annual report.
The Filing Process
The submission of Form 5500-SF is a completely electronic process. Paper filings are not accepted; it must be filed through the Department of Labor’s ERISA Filing Acceptance System, known as EFAST2.
To begin, the plan administrator or the person signing the form must register for filing credentials on the EFAST2 website. This process provides a unique User ID and PIN that serve as an electronic signature. Once registered, the filer can log in to the system to complete the form online or upload a completed form prepared with EFAST2-approved third-party software.
After all the required information has been entered and verified for accuracy, the form must be electronically signed using the previously obtained User ID and PIN. This signature legally certifies the information provided in the return. Once signed, the form can be submitted through the EFAST2 portal.
The deadline for filing Form 5500-SF is the last day of the seventh month following the end of the plan year. For a plan that follows the calendar year, this deadline is July 31. If needed, a plan administrator can file Form 5558 with the IRS to request a 2.5-month extension. All submitted Form 5500-SF filings are made publicly available on the DOL’s website.