Does your business offers a pension plan, 401(k) or other retirement plan that is required to submit an annual return/report under Title I of ERISA? If so, you should know that for plan years beginning on or after January 1, 2009, the Form 5500 that you file annually with the Department of Labor must be submitted using the Department of Labor’s electronic filing system. Going forward, any delinquent or amended Form 5500 annual return/reports for years prior will also need to be filed electronically through EFAST2.
The EFAST2 electronic filing system, which became operational January 1, 2010, is part of an overall government trend toward streamlining data management and “going green.” The IRS, for instance, has encouraged e-filing of taxes for some time, because filing electronically saves time, saves money and reduces error rates.
Form 5500 forms are due by July 31, 2010; businesses that do not file electronically will be subject to fines of up to $15,000.
While many businesses have already recognized the benefits of filing electronically, at least one businessperson is not happy about the new Form 5500 e-filing requirement. He contends that the new requirement will adversely impact rural business owners and older business owners (hey, his words, not mine).
“Not everyone understands how to use the Internet or has access to the Internet," says Brett Goldstein, a Plainview, New York-based pension administrator and president of consulting firm The Pension Department. "Small-business owners in rural America and older business owners are going to have a hard time complying with the DOL's mandate.”
"A petition is being sent to the Department of Labor asking them to allow actuaries and tax preparers to file the Form 5500 on behalf of clients. It's one thing to allow companies to electronically file, but to mandate that everyone must file electronically without any exceptions is unconstitutional,” Goldstein contends.
According to a spokesperson at the Department of Labor third-party preparers can prepare and submit Form 5500 on behalf of their clients. What they can’t do is sign the form on the client's behalf. In the EFAST2 system, the ID and password given to employers serves as the employer’s electronic signature. This PIN cannot be shared (even with the third-party preparer).
However, the preparer can complete the forms, then have the employer visit the preparer’s office and use the preparer’s computer to register for Filing Signer credentials. Registration can also be done on any public computer such as those at a library or business center.
“We appreciate the fact that some filers may find it easier to comply with the electronic signature requirement if PIN sharing were permitted,” the DOL’s Web site states. “However, we believe plan administrators and other filers will be able to comply with their annual reporting obligations within the EFAST2 system PIN requirements even if some filers will need to adjust their practices to address individual challenges.”
The DOL’s website has a comprehensive list of FAQs about the EFAST2 system.
