Form 5500 Reports Provide Detailed Private Pension Plan Information, Which Is Primarily Used to Determine Compliance with Federal Laws

Detailed information on private pension plans is reported on the Form  5500 and is used by Labor, IRS, and PBGC for compliance, research, and  public disclosure purposes. Each agency uses data from Form 5500  Reports primarily as a means to identify actual and potential violations of  ERISA and the IRC, as well as for research and policy formulation. Form 5500 schedules are used to collect more in-depth information,  including data on assets, liabilities, insurance, and financial transactions. Finally, others outside of the federal government use Form 5500  information. The  public disclosure of the form is a Labor function required by ERISA. Statutory Reporting Requirements, Current Processing Methods, and Labor Practices Delay the Release of Form 5500 Information

Statutory reporting requirements, EFAST processing issues, and current  Labor practices delay the release of Form 5500 information for up to 3  years in some cases. Agency  officials told us that the timeliness of Form 5500 Reports affects their use  of the information. Thus, plan sponsors can take up to 285 days from the  end of the plan year to file their Form 5500 reports. According to Labor officials, paper filings take more than  three times as long as electronic filings to process and have nearly twice  as many errors. Labor’s Need for Complete and Accurate Filing Records for a Plan Year Also Delays the Release of Certain Form 5500 Information

We found that currently Labor waits until EFAST has processed all filings  for a plan year before finalizing work on the Form 5500 research file— Form 5500 information in its most practical form for producing aggregate  statistics and conducting policy research. The Timeliness of Form 5500 Reports Affects Federal Agencies’ Use of the Information

Although Labor, IRS and, PBGC have access to the Form 5500 information  sooner than other federal agencies and the general public, the agencies are  affected by the long processing times for paper filings and EFAST’s paper- based correction process. Despite Efforts to Improve Its Content, the Form 5500 Lacks Key Information

Labor, IRS, and PBGC have taken steps to improve the content of the  Form 5500, including reviewing the form annually and revising the content  as needed to ensure that the form is collecting all required information  while not overburdening plan sponsors. Despite the content changes that  have been made, the Form 5500, in its current form, lacks key information  that could better assist Labor, IRS, and PBGC in tracking and identifying  plans from year to year and monitoring multiemployer plans. In addition to having more information on defined contribution plans,  federal and private sector researchers also said that it would be useful if  information reported on Section 4010 filings, such as information about  the ability of a defined benefit plan to meet its obligations to participants if  the plan were to be terminated, were captured on the Form 5500. Conclusions

The Form 5500 is the primary source of information available concerning  the operation, funding, assets, liabilities, and investments of private  pension plans. Alternatively, certain types of information could be reported earlier than  the current filing deadline, such as information on a plan’s funding status,  which could also provide regulators with more timely information. We are sending copies of this report to the Secretary of Labor, the  Commissioner of Internal Revenue, the Executive Director of the Pension  Benefit Guaranty Corporation, the Commissioner of Social Security,  appropriate congressional committees, and other interested parties.
Why GAO Did This Study

The Form 5500 is the primary source of information for both the federal government and the private sector regarding the operation, funding, assets, and investments of private pension and other employee benefit plans. Currently, the Department of Labor (Labor) requires about 3 years to provide certain usable Form 5500 information to the public, leading to complaints that the information is not timely. We have prepared this report under the Comptroller General's authority, and it is intended to assist Congress in improving the timeliness and content of Form 5500 information. This report is addressed to the congressional committees of jurisdiction. It examines: (1) the information reported on the form and how it is used, (2) factors that affect the timeliness of Form 5500 information, and (3) issues affecting the content of the form.

What GAO Found

Detailed information on private pension plans is reported on the Form 5500, and Labor, the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) use the information for compliance, research, and public disclosure purposes. Information collected on the form includes basic plan identifying information as well as detailed information including assets and liabilities, insurance, and financial transactions. The principal users of Form 5500 Reports--Labor, IRS, and PBGC--use the reports primarily as a compliance tool to identify actual and potential violations of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. Other federal agencies and policy researchers also use Form 5500 information. Statutory reporting requirements, processing issues, and current Labor practices affect the timeliness of the release of Form 5500 information, resulting in a 3 year lag, in some cases, in releasing certain usable computerized Form 5500 information to the non-principal federal agencies and others. First, under the current statutory reporting requirements, filers can have up to 285 days after the end of the plan year to file their Form 5500. Second, 98 percent of filings are in a paper format. These take more than three times as long as electronic filings to process and have twice as many errors. Third, the release of the Form 5500 information in the research file--the Form 5500's most practical form--is further delayed because Labor waits until all filings for that plan year are processed, which can take up to 2 years. Despite the efforts of Labor, IRS, and PBGC to improve its content, the Form 5500 lacks key information. These agencies have taken certain steps to improve the content of the Form 5500, such as reviewing the Form 5500 annually to ensure that the form is collecting all the information required by law. However, the form still lacks key information that could better assist Labor, IRS, and PBGC in identifying and tracking all plans over time and monitoring multiemployer plans. Federal and private sector researchers also told us the form could collect better plan financial information, such as 40l(k) plan fees. In addition, federal agency officials told us certain information could be reported earlier than the current filing deadline, such as information on a plan's funding status, as well as its assets and liabilities.