While everyone was paying attention to the DNC Convention, the IRS, Department of Labor and Pension Benefit Guaranty Corp released regulations proposing new requirements for Form 5500 filings. Dealerships are probably very familiar with filing 5500’s for the retirement plan, but did you know that if you have over 100 plan participants there is a requirement to file one for your insurance programs as well?
Well, the prior mentioned agencies now want to make sure every company offering benefits gets to share the same experience. Beginning with plan year 2019, all companies offering group health plans will be required to file a 5500. To ensure they collect the correct data to cross reference with required offers of coverage to the employees, the agencies created the new Schedule J.
Much of the information required on Schedule J will be found on the Summary Plan Document (SPD) referenced in my previous newsletter compliance articles. Schedule J will go even further and ask the fiduciary if all of the proper forms have been distributed and whether the forms actually follow the guidelines established by regulation.
Please go back and re-read the previous articles on fiduciary responsibilities and figure out which dealership employees are prepared to take personal financial responsibility for plan compliance. (See “Protecting Your Business, Employees and Fiduciaries” and “Are You A Fiduciary? Why You Need to Know”) Just in case you question the sincerity of the Department of Labor, page 102 of the proposed regulations state: ”Furthermore, the DOL believes that the inclusion of such compliance questions will encourage plans to evaluate whether or not they meet the group health plan requirements of ERISA, potentially increasing the voluntary compliance by ERISA plans.” This is the same “voluntary” referred to when the IRS speaks about filing a 1040. My question to each and every dealership is, do you have to pay penalties when you file any tax form late?
If you think it might be a good strategy to just wait until 2019 to obtain all of the proper documents, remember that penalties are retroactive back to the first date of violation, can be imposed by multiple agencies simultaneously and will include multiple violations. For example, not filing Form 5500 is a $1,100 a day fine (or higher if adjusted pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990). Once it is discovered that your dealership did not have a SPD, additional fines will be imposed for the years the SPD was not distributed. The IRS will quickly follow up with their own fine for not timely filing Form 8928 disclosing annual health plan compliance failures.
EDA strongly encourages every dealership to review their health plan compliance and take actions today to get your employee benefit plan into compliance. The price charged by the administrator, TASC, is equal to just one day of penalties imposed by just one of the agencies. The protection offered by TASC is immeasurable if, or rather, when you find your dealership in the mists of an audit.
Bill Hill, President of Visor