The Employee Retirement Income Securities Act (ERISA) and the Internal Revenue Code (Code) impose certain annual reporting and filing obligations on employee pension and welfare benefit plans. These annual reporting obligations are typically satisfied by filing a Form 5500 Annual Return/Report together with any required attachments and schedules.

On December 11, 2006, the U.S. Department of Labor (DOL), U.S. Department of Treasury, Internal Revenue Service, and the Pension Benefit Guaranty Corporation, proposed changes to the current version of the Form 5500 Annual Return/Report. The changes are designed to implement the new annual reporting requirements and confirm compliance with the new minimum funding requirements enacted as part of the Pension Protection Act of 2006.

Some of the proposed changes include:

• Replacing Schedule B (Actuarial Information) with separate schedules for single-employer defined benefit pension plans and multiemployer pension plans;
• Utilizing a “Short Form 5500” for eligible small plan filers; and
• Adding additional questions to Schedule R (Qualified Retirement Plan Information) to collect new information on defined benefit pension plans required under the Pension Protection Act. For example, the revised Schedule R would include a new section requiring large defined benefit plans (1000 or more participants) to report (a) the percentage of plan assets held as stock, debt, real estate, and “other”; (b) the percentage held of government debt, investment grade corporate debt, and high-yield corporate debt; and (c) a duration calculation for the plan’s total portfolio.

The changes will most likely take effect for 2008 plan year filings and will impact employee pension and welfare benefit plans, plan sponsors, administrators, and service providers to plans subject to the annual reporting requirements under ERISA and the Code. The full text of the proposal and examples of the new schedules are posted on the DOL’s Web site. Some of the proposed changes, particularly in Schedule R, appear to us to be unduly burdensome.

The DOL has invited Individuals to submit comments on the proposed revisions to Form 5500. These are due to the DOL by January 10, 2007. We plan to submit comments. Please let us know if there are changes that you would like to see.