New year, new Form 5500 filing process

There is a chill in the air.

Thanksgiving leftovers, and those special house guests, are long gone. Most of us even survived Black Friday. That could only mean one thing: It is officially the holiday season.

Regardless of your religious denomination, one thing is universal: We all exchange gifts. This year is extra special because everyone in the retirement industry is getting the same wonderful gift from our step-parent, the Department of Labor. The gift cannot be returned, exchanged or even re-gifted. Yes, we are all stuck with filing Form 5500 electronically.

On and after Jan. 1, Form 5500 will need to be processed on the government's EFAST2 Web site, including all late or amended returns from a prior year. The government has not yet finalized all of the details, but service providers basically have two options: Purchase one of the privately-developed software products popping up in the marketplace or use the free I-FILE application provided by the Department of Labor.

Regardless which method is used, the process will involve two steps. The first step is preparing Form 5500, which then must be reviewed and signed electronically by plan sponsors.

At first glance, that doesn't seem too bad. It does have its positives. No paper and no postage are involved, for instance, and a copy always will be readily available. As with every positive, however, there are bound to be some negatives. Some potential negatives include the navigational challenges of a new government Web site, forgotten user IDs and passwords, and even procrastination § the kind that is inherent with change.

Retirement industry professionals are preparing for a crazy Form 5500 filing season. We are scrambling to change our processes to accommodate the new mandate. Many decisions are being made, including which software to use and how to plan sponsors can be educated. We know we will have to be flexible as we encounter some bumps in the road. All of us been through legal changes and document restatements before. The one thing putting a lump in our throats now is human nature and consumer behavior.

It is human nature to resist change and consumer behavior historically is difficult to modify. Most plan sponsors are knowledgeable and very involved in their plans. Those plans and their sponsors will be fine and the change likely will mean little more than a minor inconvenience.

Our concern is with plan sponsors who are not deeply involved in their plans, who may rely on plan providers to handle everything. It is that part of the industry that will need extra assistance and attention.

Extra steps are involved in this new filing process, from registering on the EFAST2 Web site and getting a personal login ID and PIN, to electronically signing the return. The registration process must be done early in the new year. Plan sponsors thereafter can log in and electronically sign their returns once they are prepared.

Success for those plan sponsors is going to depend on education and communication from their providers. We need to step back and rethink how we operate, and seek to provide simple and clear instructions for plan sponsors. The Department of Labor has developed several tools to help in that regard.

An EFAST2 tutorial with a Frequently Asked Questions section and a Customer Service Help Desk § available at 1-866-463-3278 § have been established. While the government promises to keep the content up-to-date, as the process evolves I think plan sponsors will continue to relay on providers for information.

It is going to be absolutely essential for providers to have communication and information prepared well in advance. If done correctly, this will prove an excellent value-added service. The other key must be a change in provider deadlines with plan sponsors. It is essential to get an early start. Can you envision a provider uploading a Form 5500 on July 28 and instructing a sponsor to go out and sign the return at the last minute? Just imagine the plan sponsor having technical issues and waiting hours on the help line trying to receive assistance. That is not a scenario any provider or plan sponsor wants to contemplate.

My advice to retirement plan service providers is to communicate with plan sponsors early and often, and with simple instructions. Set an early deadline for your Form 5500 process and plan on numerous follow-ups with sponsors. Being proactive may ensure you're the one who saves the day for your plan sponsor clients.

I recommend that plan sponsors visit the Department of Labor's Web site at to learn more about the EFAST2 all-electronic filing system and log in when the site becomes available in January. Watch for communications from your plan service provider and attend any informational, educational sessions they may sponsor. Working together, we'll meet the new challenges head-on and achieve success.


Dominic Borrelli, QKA, is a client relationship manager for EPIC Advisors Inc., a full-service retirement plan service provider with emphasis on 401(k) plans. He can be reached at (585) 232-9060.


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