The Department of Labor (DOL) now wants practitioners to jump through hoops and the result does not add value to the client engagement. Effective May 13, 2010, the DOL now requires that practioners obtain EFAST2 signing credentials – to do so, a client must sign an authorization form giving the practitioner the authority to electronically sign and file Form 5500 on their behalf.
This new rule is causing quite a stir with the Third Party Administrator (TPA) and CPA community who prepare Forms 5500. Personally, I don’t quite understand how it got so complicated, since the Internal Revenue Service has permitted tax practitioners to electronically sign their clients’ returns for several years as long as the practitioner has obtained the proper signed authorization from their client.
After 5 ½ months, the DOL came to terms with practicality. Under the new set of rules, the practitioner must still jump through hoops but not quite as many as before.
- Practioners will still need to obtain EFAST2 signing credentials, but plan administrators and plan sponsors who choose to have their service provider manage the process will not need any EFAST2 credentials.
- The practitioner must have written authorization from the plan administrator/employer to submit each plan’s electronic filing and is required to maintain the statement in their records. I intend to require my clients to sign a statement for each filing for each year. Note: I am not an attorney and this is not offered, nor should it be treated, as legal advice.
- The plan administrator/employer must manually sign a paper copy of the completed Form 5500 or Form 5500-SF. It should be noted that this duty is required without regard to the method of electronic filing and applies to all Form 5500 series filers. The manually signed copy must be made available for inspection by participants and beneficiaries, as explained in the plan’s Summary Annual Report or Annual Funding Notice.
- The service provider must include a PDF copy of the first two pages of the manually signed Form 5500 or Form 5500-SF as an “Other Attachment” in the electronic filing.
- The service provider must inform the plan administrator/employer that this filing option will result in the image of the plan administrator’s/employer’s manual signature(s) being visible on the filing posted on the DOL’s electronic public disclosure web site.
Guess this beats the ‘signing ceremony’ that we would have had to make our clients go through. However, it doesn’t explain why the DOL came out mandating a process that was so not practical. They need to put themselves more in the place of the practitioner trying to help their clients remain compliant while at the same time who is trying to add value and help their clients grow/prosper. Are this many hoops truly necessary?
If you have questions on the EFAST2 issue or filing Form 5500, post a comment below or contact our Third Party Plan Administration Group at 440-449-6800.