The form is the  primary source of information collected by the federal government  regarding the operation, funding, expenses, and investments of employee  benefit plans. Form 5500 data are made  publicly available. 1). Challenges with Finding Key Information

In addition to challenges with the reporting format, Form 5500  stakeholders identified various instances where information is not  collected or easily extracted from Form 5500 data. Stakeholders Cited Misalignment with Other Fee Disclosures and Inconsistent Reporting of Service Provider Fee Information as Problematic

Stakeholders identified a wide range of challenges related to Form 5500  service provider fee information. Plans  with fewer than 100 participants are not required to complete a Schedule  C (Service Provider Information). DOL, IRS, and PBGC Face Administrative, Statutory, and Contractual Challenges to Collecting More Useful Form 5500 Information

		Agencies’ Administrative Processes for Revising the Form and Limited Efforts to Solicit Stakeholder Input Pose Challenges

DOL, IRS, and PBGC stated that the process for making form changes is  lengthy and involved, and also noted that it varies by agency. Specifically IRS has: negotiated with DOL to use the form to collect some data that would  be of interest to IRS (pursuant to DOL’s authority in light of the  limitation on IRS’s authority),  included in the past 4 years of the President’s Budget Request, a  legislative proposal to provide Treasury with the authority to require  additional information be included in electronically filed Form 5500  annual reports, and   initiated regulatory action governing electronic filing by proposing in  August 2013 regulations that would require electronic filing for plan  sponsors and others who file more than 250 returns annually. For  years, we and others have raised concerns regarding the data collected  via the Form 5500. Despite these long-standing concerns, agency officials have  made only routine changes to the plan investment and service provider  fee information in the form over the last 3 years. While the rulemaking process and other informal efforts to solicit  stakeholder input have provided opportunities for public reaction to  proposed changes to the form, these opportunities have been limited and  they have not, as OMB guidance suggests, allowed for sufficient input to  help shape changes to the form. This input could reduce the agencies’  costs of making subsequent changes, improve filer comprehension, and  increase the comparability and reliability of data provided. Recommendations for Executive Actions

To improve the usefulness, reliability, and comparability of Form 5500  data for all stakeholders while limiting the burden on the filing community,  we recommend the Secretaries of DOL and Treasury, and the Director of  PBGC consider implementing the findings from our panel when modifying  plan investment and service provider fee information, including:  revise Schedule H plan asset categories to better match current  investment vehicles and provide more transparency into plan  investments; revise the Schedule of Assets attachments to create a standard  searchable format; develop a central repository for EIN and PN numbers for filers and  service providers to improve the comparability of form data across  filings;  clarify Schedule C instructions for direct, eligible indirect, and  reportable indirect compensation so plan fees are reported more  consistently and, as we recommended in the past, better align with  the 408(b)(2) fee disclosures; and  simplify and clarify Schedule C service provider codes to increase  reporting consistency. GAO continues to believe the  recommendations are still valid. PBGC agreed with our second recommendation, and stated that it would  work with DOL and Treasury to explore options to conduct advance  testing when making revisions to the form. Treasury and DOL did not  state whether they agreed or disagreed with the recommendation. Aspects of the Form 5500 information on service provider fees  3. Challenges the Department of Labor (DOL), the Department of the  Treasury’s Internal Revenue Service (IRS), and the Pension Benefit  Guaranty Corporation (PBGC) face in collecting and revising key  annual reporting information on plan investments and service provider  fees needed from plan sponsors. In the first  phase, we asked this sample of panelists to identify challenges with the  Form 5500 plan investment and service provider fee data collection, and  to suggest changes that could improve the efficiency, clarity, and  usefulness of those data.
Why GAO Did This Study

The Form 5500 is the primary means of collecting information for use by the federal government and the private sector on retirement plan assets, which exceeded $6 trillion in fiscal year 2011. Stakeholders, including those who prepare and use the form, have raised concerns about the quality and usefulness of form data. GAO was asked to review Form 5500 plan investment and fee information.
In this report, GAO examined: (1) stakeholder problems with Form 5500 plan investment information; (2) stakeholder problems with Form 5500 service provider fee information, and (3) challenges DOL, IRS, and PBGC face in collecting and revising Form 5500 information. GAO surveyed a panel of plan sponsors, service providers, representatives of plan participants, and researchers; interviewed agency officials; and reviewed studies on Form 5500 data.

What GAO Found

In a two-phase online GAO survey, stakeholders identified problems with the usefulness, reliability, and comparability of data from the Form 5500 (see table). Despite longstanding concerns with the Form 5500—the annual report that employee benefit plans file with the federal government—agency officials have made only minimal changes over the last 3 years.
Key Challenges Identified with Form 5500
Stakeholders said the form's information on service provider fees was misaligned with other required fee disclosures, and also cited various exceptions and gaps in current reporting requirements as major challenges. Specifically, Form 5500 service provider fee information does not align with other information that service providers must disclose to plan sponsors, forcing providers to produce two different sets of information. Also, differences in service provider compensation types and the lack of definitions for codes designating the types of services provided can result in inconsistent and incomplete data being reported. Other exceptions and gaps in service provider information result in an incomplete picture of plan fees. For example, large plans—those with 100 or more participants—are not required to report fee information for certain types of compensation and small plans file only limited fee information.
The Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) face significant administrative, statutory, and contractual challenges to collecting and revising the annual reporting information required for regulating private pensions. While the rulemaking process and other informal efforts to solicit stakeholder input have provided opportunities for public reaction to proposed changes to the form, these opportunities have been limited and have not included the advance testing OMB guidance suggests. Stakeholder input could lower costs by reducing subsequent changes, improve filer comprehension, and increase the comparability and reliability of the form's data. Additionally, a statutory prohibition against requiring electronic filing caused IRS to remove certain data elements from the Form 5500 after DOL mandated electronic filing of the form. If IRS were able to require electronic filing, it could add the data elements back to the form, which would improve its compliance, restore robust information to its enforcement activities, and decrease its data collection costs.

What GAO Recommends

GAO recommends DOL, Treasury, and PBGC consider modifying Form 5500 plan investment and service provider fee information to address challenges identified by our panel. DOL, Treasury, and PBGC should look for options to conduct advance testing when making major revisions to the form. Congress should consider granting Treasury authority to require Form 5500 data be filed electronically. PBGC agreed with the recommendations. DOL and Treasury did not state whether they agreed or disagreed with the recommendations; however, they identified actions underway to address the first recommendation. GAO continues to believe the recommendations are valid.