IRS Releases Draft Revised Form 5300 and Instructions
The Internal Revenue Service (IRS) recently released proposed revisions to Form 5300, the Application for Determination for Employee Benefit Plan, and its instructions. Form 5300 is generally used to request an IRS determination that an individually designed retirement plan meets the requirements of tax qualification under Sections 401(a) and 501(a) of the Internal Revenue Code. The draft revised Form 5300 is dated February 2013; thus, it could replace the current Form 5300 effective for determination letter submissions filed on or after February 1, 2013 (i.e., effective for Cycle C filers). The IRS published the current version of Form 5300 in April 2011. Until the draft revised Form 5300 is finalized, the April 2011 version must be used for all determination letter applications.
The draft revised Form 5300 asks the plan sponsor to provide some additional information. For example, the plan sponsor must:
- Identify each plan amendment using a number or name (i.e., “First Amendment”)
- Classify each plan amendment as an interim amendment only, a discretionary amendment only or both
- Disclose the due date of the plan sponsor’s tax return, including extensions, if applicable, for the year in which an interim amendment was adopted
- Designate the specific tax return form used by the plan sponsor to file its return
- Note whether any issue was resolved during the last remedial amendment cycle before the U.S. Department of Labor or the Voluntary Compliance Program of the Employee Plans Compliance Resolution System of the IRS
- Report whether the plan uses a normal retirement age below age 62, if applicable
- Inform the IRS of any pending determination letter application
- Describe the plan's 401(k) safe harbor design, if applicable
Special rules also apply to pre-approved plans, employee stock ownership plans, church plans, multiple employer plans and plans that elect a determination regarding one of the design-based safe harbors for contributions or benefits.
Finally, the above changes are in addition to the elimination from the Form 5300 of Schedule Q elective demonstrations regarding coverage and nondiscrimination testing requirements. This elimination was effective for applications filed on or after February 1, 2012.
Because the draft revised Form 5300 contains numerous changes, plan sponsors and their advisors will need to carefully review the instructions, once they are finalized, in anticipation of submitting a Form 5300. View the draft revised form and instructions. To submit comments on the draft revised Form 5300, click here or e-mail [email protected].