2013 Form 5500 Changes Expand Information Reporting Obligations for Welfare Plans | Practical Law

2013 Form 5500 Changes Expand Information Reporting Obligations for Welfare Plans | Practical Law

The DOL has issued advance copies of the 2013 Form 5500 and related instructions. Among other things, the instructions address new reporting obligations relating to Form M-1 compliance information that apply to all welfare plans.

2013 Form 5500 Changes Expand Information Reporting Obligations for Welfare Plans

Practical Law Legal Update 1-551-3315 (Approx. 3 pages)

2013 Form 5500 Changes Expand Information Reporting Obligations for Welfare Plans

by Practical Law Employee Benefits & Executive Compensation
Published on 10 Dec 2013 • USA (National/Federal)
The DOL has issued advance copies of the 2013 Form 5500 and related instructions. Among other things, the instructions address new reporting obligations relating to Form M-1 compliance information that apply to all welfare plans.
On December 5, 2013, the DOL issued advance copies of the 2013 Form 5500, schedules and related instructions. Among other things, the instructions:
  • Address new reporting obligations regarding Form M-1 compliance that apply to all welfare plans.
  • Reflect expanded reporting requirements for multiple employer welfare arrangements (MEWAs) under the Affordable Care Act (ACA), which were implemented earlier this year in final regulations (see Legal Update, DOL Final Rules Target MEWA Abuses).
Form M-1 is the annual report for MEWAs and certain entities claiming exception (ECEs). Generally, Form M-1 must be filed electronically by March 1 following the calendar year for which a filing is required.
Under the 2013 instructions, all welfare plans must include an attachment that is clearly labeled "Form M-1 Compliance Information" at the top. The attachment must state:
  • For plans that provide welfare benefits, whether the plan was subject to the Form M-1 filing requirements during the plan year.
  • For plans subject to the Form M-1 filing requirement, whether the plan is currently in compliance with those requirements.
  • The Receipt Confirmation Code (a unique code generated by the Form M-1 electronic filing system) for the 2013 Form M-1 annual report, or, if the plan was not required to file the 2013 Form M-1 annual report, the Receipt Confirmation Code for the most recent Form M-1 required to be filed by the filing date of the 2013 Form 5500.
All employee welfare benefit plans that are MEWAs and ECEs subject to Form M-1 reporting must file Form 5500, regardless of plan size or type of funding.
If a plan's Form 5500 filing does not include a completed attachment, the filing can be:
  • Rejected as incomplete.
  • Subject to penalties under ERISA.

Practical Impact

The reporting changes reflected in the 2013 Form 5500 rules are part of several ACA changes impacting MEWAs, which were collectively intended to reduce fraud and abuses in MEWAs. The ACA also added criminal penalties under ERISA for individuals who knowingly make false statements or representations of fact, in connection with the sale or marketing of a MEWA, regarding:
  • The MEWA's financial condition or solvency.
  • Benefits provided by the MEWA.
  • The MEWA's regulatory status.
In addition, MEWAs must register with the DOL before operating in a state. Under another change, the DOL can issue cease and desist orders, without prior notice or hearing, when it appears that a MEWA's conduct:
  • Is fraudulent.
  • Creates an immediate danger to the public safety or welfare.
  • Causes or can be reasonably expected to cause significant, immediate and irreparable injury.