IRS issues proposed regs that require filing certain retirement plan returns on magnetic media

The IRS has issued proposed regulations that require the filing of certain retirement plan statements, returns, and reports under Code Secs. 6057, 6058, and 6059 (i.e., Form 8955-SSA, Form 5500 series, and Schedule SB and Schedule MB) on magnetic media. The term “magnetic media” includes electronic filing, as well as other magnetic media specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance on the IRS website. The proposed regulations would affect plan administrators and employers maintaining retirement plans that are subject to various employee benefit reporting requirements under the Code. Comments and requests for a public hearing must be received by October 29, 2013.

When the Department of Labor mandated that Form 5500 and Form 5500-SF be filed electronically through EFAST2, certain items on these forms that related solely to Code requirements were eliminated. The information on the forms, schedules, and attachments that were eliminated was used by the IRS for compliance purposes. The IRS explained that, by mandating electronic filing of information, it will obtain valuable plan information that is not currently required to be filed through EFAST2. In coordination with the DOL, the IRS anticipates adding items on the Form 5500 and Form 5500-SF relating solely to Code requirements. For those filers that are not subject to IRS electronic filing requirements, the IRS plans to provide a paper-only form containing those Code-related items and an alternative method of filing with the IRS.

Requirements for filing 250 returns

The proposed regulations provide that a plan administrator (or, in certain situations, an employer maintaining a plan) required to file at least 250 returns during the calendar year that includes the first day of the plan year must use magnetic media to file statements, returns, and reports under Code Secs. 6057, 6058, and 6059. The determination of whether a filer is required to file at least 250 returns is made by aggregating all returns, regardless of type, that the filer is required to file, including for example, income tax returns, returns by exempt organizations that are required under Code Sec. 6033, information returns, excise tax returns, and employment tax returns.

Definition of filer

In addition, under the proposed regulations, the term “filer” means the plan administrator within the meaning of Code Sec. 414(g) for Form 8955-SSA and Schedules SB and MB. For the Form 5500 series, “filer” means the employer or employers maintaining the plan and the plan administrator within the meaning of Code Sec. 414(g). Thus, in applying the 250-return requirement for the Form 5500 series, the returns of the employer or employers maintaining the plan and of the plan administrator are aggregated.

Failure to file

Finally, the proposed regulations cover failures to file electronically, penalties, and determinations concerning reasonable cause for failures to file electronically and undue economic hardship. It is anticipated that the granting of waivers of the electronic filing requirement will occur only in exceptional cases and will be particularly rare for filers of Form 5500 and Form 5500-SF because these filers are already required to file electronically under EFAST2.

Applicability date

These regulations are proposed to apply for retirement plan statements, notifications, returns, and reports required to be filed under Code Secs. 6057, 6058, and 6059 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2014.

Source: IRS proposed regulations, 78 FR 53704, August 30, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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