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entitled 'Private Pensions: Government Actions Could Improve the 
Timeliness and Content of Form 5500 Pension Information' which was 
released on June 3, 2005.

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Report to Congressional Committees:

United States Government Accountability Office:

GAO:

June 2005:

Private Pensions:

Government Actions Could Improve the Timeliness and Content of Form 
5500 Pension Information:

GAO-05-491:

GAO Highlights:

Highlights of GAO-05-491, a report to congressional committees

Why GAO Did This Study:

The Form 5500 is the primary source of information for both the federal 
government and the private sector regarding the operation, funding, 
assets, and investments of private pension and other employee benefit 
plans. Currently, the Department of Labor (Labor) requires about 3 
years to provide certain usable Form 5500 information to the public, 
leading to complaints that the information is not timely. We have 
prepared this report under the Comptroller General's authority, and it 
is intended to assist Congress in improving the timeliness and content 
of Form 5500 information. This report is addressed to the congressional 
committees of jurisdiction. It examines: (1) the information reported 
on the form and how it is used, (2) factors that affect the timeliness 
of Form 5500 information, and (3) issues affecting the content of the 
form.

What GAO Found:

Detailed information on private pension plans is reported on the Form 
5500, and Labor, IRS, and PBGC use the information for compliance, 
research, and public disclosure purposes. Information collected on the 
form includes basic plan identifying information as well as detailed 
information including assets and liabilities, insurance, and financial 
transactions. The principal users of Form 5500 ReportsLabor, IRS, and 
PBGCuse the reports primarily as a compliance tool to identify actual 
and potential violations of the Employee Retirement Income Security Act 
of 1974 and the Internal Revenue Code. Other federal agencies and 
policy researchers also use Form 5500 information. 

Statutory reporting requirements, processing issues, and current Labor 
practices affect the timeliness of the release of Form 5500 
information, resulting in a 3 year lag, in some cases, in releasing 
certain usable computerized Form 5500 information to the non-principal 
federal agencies and others. First, under the current statutory 
reporting requirements, filers can have up to 285 days after the end of 
the plan year to file their Form 5500. Second, 98 percent of filings 
are in a paper format. These take more than three times as long as 
electronic filings to process and have twice as many errors. Third, the 
release of the Form 5500 information in the research filethe Form 
5500s most practical formis further delayed because Labor waits until 
all filings for that plan year are processed, which can take up to 2 
years. 

Despite the efforts of Labor, IRS, and PBGC to improve its content, the 
Form 5500 lacks key information. These agencies have taken certain 
steps to improve the content of the Form 5500, such as reviewing the 
Form 5500 annually to ensure that the form is collecting all the 
information required by law. However, the form still lacks key 
information that could better assist Labor, IRS, and PBGC in 
identifying and tracking all plans over time and monitoring 
multiemployer plans. Federal and private sector researchers also told 
us the form could collect better plan financial information, such as 
40l(k) plan fees. In addition, federal agency officials told us certain 
information could be reported earlier than the current filing deadline, 
such as information on a plans funding status, as well as its assets 
and liabilities.

Timeliness of the Processing and Release of Form 5500 Information: 

[See PDF for image]

[End of figure]

What GAO Recommends:

GAO makes recommendations to Labor, the Internal Revenue Service, and 
the Pension Benefit Guaranty Corporation aimed at improving the 
timeliness and content of Form 5500 information such as requiring the 
electronic filing of Form 5500 and making modifications to the form. 
Labor, IRS, and PBGC generally agreed with our recommendations. Also, 
Labor, IRS, PBGC, and the Social Security Administration provided 
technical comments on the draft. We incorporated each agencys comments 
as appropriate. 

www.gao.gov/cgi-bin/getrpt?GAO-05-491.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Barbara Bovbjerg at (202) 
512-7215 or bovbjergb@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Form 5500 Reports Provide Detailed Private Pension Plan Information, 
Which Is Primarily Used to Determine Compliance with Federal Laws:

Statutory Reporting Requirements, Current Processing Methods, and Labor 
Practices Delay the Release of Form 5500 Information:

Despite Efforts to Improve Its Content, the Form 5500 Lacks Key 
Information:

Conclusions:

Recommendations:

Agency Comments:

Appendix I: Comments from the Department of Labor:

Appendix II: Comments from the Pension Benefit Guaranty Corporation:

Appendix III: Comments from the Internal Revenue Service:

Appendix IV: GAO Contacts and Staff Acknowledgments:

Tables:

Table 1: Information Reported on the Form 5500 and Schedules:

Table 2: Filing Requirements for Form 5500, Schedules, and Attachments:

Table 3: Examples of Federal Agencies That Use Form 5500 Information:

Table 4: Recommendations from Pension Practitioners and Service 
Providers for Further Streamlining the Form 5500:

Figures:

Figure 1: Participants of Defined Benefit and Defined Contribution 
Pension Plans, 1980-2000:

Figure 2: Assets of Defined Benefit and Defined Contribution Pension 
Plans, 1980-2000:

Figure 3: Defined Benefit and Defined Contribution Pension Plans, 1980- 
2000:

Figure 4: Example of Statutory Deadlines to File Form 5500 for Calendar 
Year Plan:

Figure 5: Timeline of Statutory Deadlines for a Calendar Year Plan:

Figure 6: Example of Coordination and Information Flow Required for 
Form 5500 Preparation:

Figure 7: Example of a Timeline of Form 5500 Preparation for a Calendar 
Year Defined Benefit Plan:

Figure 8: Form 5500 Reports:

Figure 9: Example of a Form 5500 Being Processed through EFAST with 
Errors:

Figure 10: Timeline for the Preparation of the 2000 Form 5500 Research 
File:

Abbreviations:

ARC: Actuarial Research Corporation:

CCT: common or collective trust:

DFE: direct filing entity:

EBSA: Employee Benefits Security Administration:

EFAST: ERISA Filing Acceptance System:

EIN: employer identification number:

ERISA: Employee Retirement Income Security Act of 1974:

ESOP: Employee Stock Ownership Plan:

GDI: gross domestic income:

GDP: gross domestic product:

GIC: guaranteed investment contract:

IRC: Internal Revenue Code:

IRS: Internal Revenue Service:

Labor: Department of Labor:

MTIA: master trust investment account:

OCR: Optical Character Recognition:

OMB: Office of Management and Budget:

OPR: Office of Policy and Research:

PBGC: Pension Benefit Guaranty Corporation:

PIN: personal identification number:

PSA: pooled separate account:

RICS: Returns and Inventory Classification System:

SAR: Summary Annual Report:

SEC: Securities and Exchange Commission:

SSA: Social Security Administration:

United States Government Accountability Office:

Washington, DC 20548:

June 3, 2005:

Congressional Committees:

The Form 5500 Report is the primary source of information for both the 
federal government and the private sector regarding the operation, 
funding, assets, and investments of private pension plans and other 
employee benefit plans.[Footnote 1] The Department of Labor (Labor), 
the Internal Revenue Service (IRS), and the Pension Benefit Guaranty 
Corporation (PBGC) jointly developed the Form 5500 so employee benefit 
plans could satisfy annual reporting requirements under the Employee 
Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue 
Code (IRC). Over 700,000 private pension plans must file the Form 5500 
annually, representing over $4.4 trillion in assets and covering over 
100 million participants.

Labor, IRS, and PBGC use the Form 5500 to collect information for their 
various roles in regulating and monitoring private pension plans. Labor 
enforces ERISA's reporting and disclosure provisions and fiduciary 
responsibility standards, which among other things, concern the type 
and extent of information provided to the federal government and plan 
participants and how pension plans are operated in the interests of 
plan participants. IRS enforces standards that relate to such matters 
as how employees become eligible to participate in benefit plans, how 
they become eligible to earn rights to benefits, and how much, at a 
minimum, employers must contribute. PBGC insures the benefits of 
participants in defined benefit private pension plans.[Footnote 2]

We have prepared this report under the Comptroller General's authority, 
and it is intended to assist the Congress in improving the timeliness 
and content of Form 5500 pension information. As it may prove helpful 
in the deliberations of committees with jurisdiction over pension 
issues, we have addressed this report to each of these committees. 
Recent changes in private pension finance have highlighted the need for 
timely and useful Form 5500 information. Since 2000, private pension 
underfunding in defined benefit plans has increased dramatically, and 
additional severe losses may be on the horizon. Consequently, we placed 
PBGC's single-employer insurance program on our high-risk list of 
programs that present significant vulnerabilities to the federal 
government, and policy makers have given their attention to ways to 
strengthen and stabilize plan funding.[Footnote 3]

In 1999, Labor, IRS, and PBGC implemented a new computerized system 
called the ERISA Filing Acceptance System (EFAST) to improve the 
processing of the forms. Because it is important that pension 
information be both timely and useful, we are reporting on (1) the 
information reported on the Form 5500 and how it is used, (2) the 
factors that affect the timeliness of Form 5500 information, and (3) 
issues affecting the content of the Form 5500.

To complete this work, we reviewed the Form 5500 and its filing 
requirements and the laws that require the filing of regulatory reports 
on pensions. We also interviewed officials from Labor, IRS, PBGC, and 
other federal agencies as well as pension experts that use this 
information. In addition, we analyzed documents regarding the Form 5500 
information federal agencies collect and their reasons for obtaining 
it. As a basis for our analysis of the factors that affect the 
timeliness of Form 5500 information, we examined the Form 5500 
statutory reporting requirements as well as the preparation and 
processing procedures for the Form 5500. We interviewed representatives 
of the contractor that operates EFAST to determine the amount of time 
needed to process Form 5500 Reports. Further, we reviewed EFAST 
operating procedures, contracts, and performance reports, and conducted 
a site visit to the EFAST processing center to examine how Form 5500 
Reports are processed. We also conducted interviews with parties 
involved in preparing and filing Form 5500 Reports, including plan 
sponsor representatives, actuaries, accountants, service 
providers,[Footnote 4] insurance companies, and financial institutions 
to determine the time and effort that is needed to prepare and file the 
forms.

To determine the factors affecting the release of usable Form 5500 
information to the public, we interviewed Labor officials responsible 
for releasing Form 5500 information products to the public and to 
government users. We also interviewed the government contractors that 
participate in the preparation of these Form 5500 products. To 
determine the issues affecting the content of the Form 5500, we 
reviewed current initiatives aimed at improving its content and 
conducted interviews with federal agency officials, industry 
association representatives, service providers, and pension experts 
that either use or prepare Form 5500 Reports. We conducted our work 
between June 2004 and June 2005 in accordance with generally accepted 
government auditing standards.

Results in Brief:

Detailed information on private pension plans is reported on the Form 
5500, and Labor, IRS, and PBGC use the information for compliance, 
research, and public disclosure purposes. Information collected on the 
form includes basic plan identifying information as well as detailed 
plan information including assets, liabilities, insurance and financial 
transactions plus financial statements audited by an independent public 
accountant, and for defined benefit plans, an actuarial statement. In 
addition, information about plan characteristics, such as plan type 
(defined benefit or defined contribution),[Footnote 5] method of 
funding, numbers of employees and participants, and employees who are 
excluded from the plan for various reasons are also reported on the 
form. The principal users of Form 5500 information include Labor, IRS, 
and PBGC. These agencies use Form 5500 Reports primarily as a 
compliance tool to identify actual and potential violations of ERISA 
and the IRC. They also use the Form 5500 to develop pension plan 
statistics and support policy formulation. In addition to the three 
principal users, other federal agencies, researchers, and private 
sector entities also use Form 5500 information to publish government 
statistics and assess employee benefit, tax, and economic trends and 
policies. The Form 5500 is also made available to the general public, 
and Labor makes the information available to public agencies, private 
organizations, and individuals.

Statutory reporting requirements, processing issues, and current Labor 
practices affect the timeliness of the release of available Form 5500 
information, in some cases, resulting in a 3 year delay in non- 
principal federal agencies, researchers, and others receiving usable 
computerized Form 5500 information. First, under the current statutory 
reporting requirements, filers have up to 285 days to file their Form 
5500s-a plan has 210 days from the end of the plan year to file its 
Form 5500, and filers may apply for an extension of an additional 2  
months. Service providers have told us this time frame is necessary 
because of the coordination with multiple parties, such as actuaries, 
accountants, and insurance companies to obtain information. Second, 
once the form is submitted, it must be processed through EFAST, which 
further affects the timeliness. Given that there is no electronic 
filing requirement and the process for plan sponsors to obtain and use 
an electronic signature to authenticate filings is burdensome, 98 
percent of filings are submitted in a paper format, which Labor 
reported can take more than three times longer to process than 
electronic filings and contain twice as many errors. Also, EFAST's data 
correction process can add up to 120 days to the processing, largely 
because once Form 5500s are submitted, the errors are caught and 
corrections are done through a paper-based correspondence process with 
the plan sponsors. Third, once the forms have been processed through 
EFAST, Labor waits until it has processed all filings for that plan 
year before releasing Form 5500 information in its most practical form-
-the research file. Labor's practice results in additional delays, 
because some filings may be caught up in EFAST's lengthy correspondence 
process to reconcile errors, and non-calendar year plan filings could 
be submitted up to a year later than calendar year plan filings but 
still be considered part of the same plan year. Agency officials told 
us that the timeliness of Form 5500 Reports affects their use of the 
information.

Despite the efforts of Labor, IRS, and PBGC to improve its content, the 
Form 5500 lacks key information. Each agency has taken steps to improve 
the content of the form, such as reviewing the Form 5500 annually and 
revising its content as needed to ensure that the form is collecting 
all the information required by law. Labor, IRS, and PBGC officials 
told us that to some extent, they use all of the information collected 
on the Form 5500. However, the form still lacks key information that 
could better assist these three agencies in monitoring plans and 
ensuring that they are in compliance with the law. For example, each 
agency is unable to accurately identify and track all plans from one 
year to the next based on Form 5500 information, which impairs Labor's 
ability to verify whether all required employers are meeting the 
statutory requirement to file a Form 5500 annually. Additionally, PBGC 
is unable to identify employers participating in multiemployer pension 
plans and the risks attending their financial condition, leaving the 
agency unable to gauge the impact that events such as employer 
bankruptcies, withdrawals, and labor strikes would have on 
multiemployer plans, their participants, and PBGC's multiemployer 
insurance program. In addition, federal agency officials and 
researchers who use Form 5500 information say that the form has not 
kept pace with changes that have occurred in the pension plan universe, 
such as the shift from defined benefit to defined contribution plans. 
Consequently, the form lacks certain information on defined 
contribution plans that they say would give them further insight into 
the condition of the private pension plan universe, such as detailed 
financial information on plan fees and 401(k) plan matching 
contributions, which could be used for research or regulatory purposes. 
With regard to defined benefit plans, federal and private sector 
researchers said the form does not collect data that would inform users 
whether defined benefit plans have sufficient assets to meet their 
obligations in the event of the plan's termination. Although federal 
agency officials and others said the form lacks certain information, 
pension practitioners and service providers told us that it could be 
further streamlined by removing certain items and consolidating 
schedules.

Because the Form 5500 is the only comprehensive source of financial and 
other plan information on private pension plans collected on a regular 
basis, and is therefore important to pension policy development and 
enforcement, we make several recommendations to Labor, IRS, and PBGC 
that are intended to improve the timeliness and content of Form 5500 
pension information. These recommendations include (1) requiring the 
electronic filing of Form 5500 Reports, (2) working collectively to 
better identify and track plans from year to year, and (3) modifying 
the Form 5500 to collect additional information on multiemployer 
pension plans. In general, Labor, IRS, and PBGC agreed with our 
recommendations. Additionally, PBGC proposed an additional 
recommendation regarding the timeliness of defined benefit pension plan 
funding information reported on Form 5500 Schedule B. The 
Administration's pension reform proposal includes a provision that 
would advance the statutory reporting date for the Schedule B to 
February 15 for certain large defined benefit plans. Although our work 
focused on the timeliness of processing Form 5500 data, we agree that 
advancing the reporting date for certain plans could be an important 
element of comprehensive pension reform.

Background:

ERISA and the IRC require administrators of pension and welfare benefit 
plans (collectively referred to as employee benefit plans) to file 
annual reports concerning, among other things, the financial condition 
and operation of plans. Labor, IRS, and PBGC jointly developed the Form 
5500 so that plan administrators can satisfy this annual reporting 
requirement.[Footnote 6] The requirements for completing the form vary 
according to the type of plan. If a company sponsors more than one 
plan, it must file a Form 5500 for each plan. Additionally, ERISA and 
the IRC provide for the assessment or imposition of penalties by Labor 
and IRS for plan sponsors not submitting the required information when 
due.[Footnote 7]

Form 5500 Reports are shared among Labor's Employee Benefits Security 
Administration (EBSA), IRS, PBGC, and the Social Security 
Administration (SSA), and each agency uses the Form 5500 to meet its 
statutory obligations. EBSA is responsible for the administration and 
enforcement of ERISA, and its primary purpose is to protect the 
pension, health, and other benefits of participants in private sector 
employee benefit plans. IRS oversees the tax code provisions of the 
law. PBGC is a federal government corporation that guarantees the 
payments of pension plan benefits to participants in the event that 
covered defined benefit pension plans terminate while underfunded. SSA 
is responsible for notifying each new Social Security or Medicare 
claimant for whom it has pension benefit information. Form 5500 Reports 
are also made available to other federal agencies and researchers 
through Labor. Once the forms for a given plan year are processed by 
EFAST they are available for enforcement and public disclosure 
purposes. In addition, after the forms are edited by Labor, the 
information is compiled into a database of usable computerized Form 
5500 information, known as the research file, which includes 
information from all plans with over 100 participants and a 5 percent 
sample of all of the smaller plans. The research file is used by 
various federal agencies and pension researchers for conducting policy 
research and developing government statistics.

Beginning with plan year 1999, EBSA assumed the administrative 
responsibility for accepting all Form 5500 filings, electronic and 
otherwise, which had previously been filed with IRS. As part of the 
switch, Labor, IRS and PBGC adopted EFAST, which was designed to 
expedite the receipt and processing of Form 5500 filings by relying on 
paper forms and electronic filing technologies. Collectively, all three 
agencies have authority to mandate the electronic filing of the Form 
5500.[Footnote 8]

There are various types of Form 5500 filers. Filers are classified as 
either single-employer plans, multiemployer plans, multiple-employer 
plans, or direct filing entities (DFEs). In general, a separate Form 
5500 must be filed for each plan or DFE. Single-employer plans are 
plans that are maintained by one employer or employee organization. 
Multiemployer plans are established pursuant to collectively bargained 
pension agreements negotiated between labor unions representing 
employees and two or more employers, and are generally jointly 
administered by trustees from both labor and management. Multiple- 
employer plans are plans maintained by more than one employer and are 
typically established without collective bargaining agreements. DFEs 
are trusts, accounts, and other investment or insurance arrangements 
that plans participate in and that are required to or allowed to file 
the Form 5500.[Footnote 9]

Filers have a normal deadline of 210 days after the end of the plan 
year to submit their Form 5500 Reports. For example, under the filing 
deadlines for plan year 2001, a calendar year filer must file its Form 
5500 by July 31, 2002. However, a non-calendar year plan, for example, 
that has a plan year that runs from October 1, 2001 to September 30, 
2002 would have until April 30, 2003 to file its Form 5500.[Footnote 10]

When the Form 5500 was first developed, nearly 30 years ago, more 
participants were covered by defined benefit plans than by defined 
contribution plans. As shown in figure 1, in 2000, defined contribution 
plans had about 62 million participants, while defined benefit plans 
had about 41 million participants.

Figure 1: Participants of Defined Benefit and Defined Contribution 
Pension Plans, 1980-2000:

[See PDF for image]

[End of figure]

As shown in figure 2, as of 1997, assets held by defined contribution 
plans exceed those held by defined benefit plans.

Figure 2: Assets of Defined Benefit and Defined Contribution Pension 
Plans, 1980-2000:

[See PDF for image]

[End of figure]

As shown in figure 3, as of 2000, employers sponsored over 687,000 
defined contribution plans compared with about 49,000 defined benefit 
plans.

Figure 3: Defined Benefit and Defined Contribution Pension Plans, 1980- 
2000:

[See PDF for image]

[End of figure]

Unlike defined contribution plans, where benefits are based on 
investment returns on individual accounts, benefits provided by defined 
benefit pension plans are partially insured by PBGC. In the case of a 
single-employer defined benefit plan, PBGC guarantees benefits when an 
underfunded plan terminates. For multiemployer defined benefit pension 
plans, the agency guarantees benefits when a plan becomes insolvent, 
which is when a plan's available resources are not sufficient to pay 
the level of benefits at PBGC's guaranteed level. PBGC's insurance 
programs and its operations are financed through premiums paid annually 
by plan sponsors, investment returns on PBGC assets, assets acquired 
from terminated single-employer plans, and recoveries from employers 
responsible for underfunded terminated single-employer plans.[Footnote 
11] Premium revenue totaled about $1.485 billion in 2004, of which 
$1.458 billion was paid into the single-employer insurance program and 
$27 million paid to the multiemployer insurance program. This is the 
highest premium revenue PBGC has ever received. In contrast, in 2004 
PBGC paid $3.007 billion in benefit payments and provided over $10 
million in financial assistance to insolvent multiemployer pension 
plans.

The termination of several large, underfunded defined benefit pension 
plans of bankrupt firms in troubled industries has worsened the single- 
employer program's net financial position. After fluctuating over the 
last decade, the single-employer insurance program now has a large and 
growing accumulated deficit and has moved from a $9.7 billion 
accumulated surplus in 2000 to a $23.3 billion accumulated deficit in 
2004. Additionally, the agency's multiemployer insurance program has a 
current deficit of $236 million. Because of the decline in the 
financial condition of the single-employer program, GAO placed it on 
its high-risk list of programs with significant vulnerabilities to the 
federal government.

Form 5500 Reports Provide Detailed Private Pension Plan Information, 
Which Is Primarily Used to Determine Compliance with Federal Laws:

Detailed information on private pension plans is reported on the Form 
5500 and is used by Labor, IRS, and PBGC for compliance, research, and 
public disclosure purposes. Each agency uses data from Form 5500 
Reports primarily as a means to identify actual and potential 
violations of ERISA and the IRC, as well as for research and policy 
formulation. Other federal agencies, private sector entities, and 
researchers also use Form 5500 data in assessing employee benefit, tax, 
and economic trends and policies. The Form 5500 is also made widely 
available to the general public.[Footnote 12]

Form 5500 Reports Provide Detailed Information about the Financial 
Condition and Operation of Private Pension Plans:

The Form 5500 is used to collect important information about the 
financial health and operation of private pension plans. Similar to the 
structure of an income tax form, the Form 5500 has multiple parts. As 
shown in table 1, there is the Form 5500 and its 12 schedules. The main 
part of the form provides basic information to identify the plan and 
type of plan. The form's schedules provide more specific information 
about the plan, such as financial information, actuarial information, 
and insurance information.

Table 1: Information Reported on the Form 5500 and Schedules:

Form 5500--Annual Report Identification; 
* Basic plan identification information and basic information about the 
plan: 
Contact information is provided on the plan's sponsor and 
administrator; 
Information on plan features and on the number of plan participants is 
reported; 
Information on the general arrangements for funding and benefits is 
reported on the form.

Plan Financial Information: 

Schedule A-Insurance Information; 
* Insurance information is filed for every defined benefit pension 
plan, defined contribution pension plan, and welfare benefit plan if 
any benefits under the plan are provided by an insurance company, 
insurance service, or other similar organization (such as Blue Cross, 
Blue Shield, or a health maintenance organization). This includes 
investments with insurance companies such as guaranteed investment 
contracts (GICs).

Schedule C-Service Provider Information; 
* Information on the service providers is for large plans mostly; 
* Plans file this if their service provider was paid $5,000 or more 
and/or if an accountant or actuary was terminated in the course of the 
plan year.

Schedule D-DFE/Participating Plan Information; 
* Filed when the Form 5500 is filed for a DFE or a plan that invested 
or participated in any DFEs, CCTs, MTIAs, 103-12 IEs, and/or PSAs, Part 
I provides information about plan investment or participation in these 
entities; Part II provides information about plans participating in the 
DFE.

Schedule G-Financial Transaction Schedules; 
* Schedule G is used to report: 
loans or fixed income obligations in default or determined to be 
uncollectible as of the end of the plan year, leases in default or 
classified as uncollectible, and; nonexempt transactions.

Schedule H-Financial Information; 
* Information on the asset holdings of large plans and DFEs.

Schedule I-Financial Information-Small Plan; 
* Information on the asset holdings of small plans.

Schedule P-Annual Return of Fiduciary; 
* The statute of limitations under section 6501(a) for any trust 
described in section 401(a), which is exempt from tax under section 
501(a), will not start to run until this schedule is filed. The 
fiduciary (trustee or custodian) must sign this schedule. If there is 
more than one fiduciary, the fiduciary authorized by the section 501(a).

Accountant's Report; 
* The accountant's report is an audited financial statement of the 
plan's operations. The report is prepared by an independent qualified 
accountant and contains the accountant's opinion as to whether the 
financial statements of the plan conform to generally accepted 
accounting principles.

Pension Benefit Information: 

Schedule B-Actuarial Information; 
* This schedule contains actuarial information on the plan assets and 
liabilities and on the actuarial assumptions used to calculate these; 
* Filed for defined benefit plans subject to minimum funding standards; 
An enrolled actuary must sign Schedule B; A stamped or machine-produced 
signature is not acceptable.

Schedule E-Employee Stock Ownership Plan (ESOP) Annual Information; 
* ESOPs complete and information only goes to IRS.

Schedule R-Retirement Plan Information; 
* Schedule R reports certain information on plan distributions, and 
funding, and the adoption of amendments increasing the value of 
benefits in a defined benefit pension plan.

Schedule SSA-Annual Registration Statement Identifying Separated 
Participants With Deferred Vested Benefits; 
* Schedule SSA is used to report all participants with deferred vested 
benefit rights who separate from a company during the plan year; 
* This information goes to SSA and is not made available to the general 
public.

Schedule T-Qualified Pension Plan Coverage; 
* Schedule T is used by certain qualified pension plans to provide 
information concerning the plan's compliance with the minimum coverage 
requirements of Code section 410(b), including the number of employees 
as well as the number of employees who are excluded from the plan.

Source: 2004 Form 5500 Annual Report and its instructions.

[End of table]

Form 5500 schedules are used to collect more in-depth information, 
including data on assets, liabilities, insurance, and financial 
transactions. These schedules can be separated into two distinct 
groups: those that contain financial information on the plan and those 
that contain information on the benefits that the plan expects to pay 
out. For example, the Schedule H is a key financial schedule and 
includes an accountant's report along with an audited financial 
statement of the plan's operations. Information from the financial 
schedules helps to provide a picture of a plan's financial condition, 
while the benefit schedules collect information on the contributions to 
and distributions made from the plan in the current and future years. 
Information collected on the benefit schedules helps to provide a 
picture of the pension plan's benefits and benefit promises.

Different sizes and types of plans must meet different requirements. 
(See table 2.) For example, small defined benefit and defined 
contribution plans must file a Schedule I rather than the more detailed 
Schedule H required for a large pension plan.[Footnote 13] 
Additionally, unlike defined contribution plans, defined benefit plans 
are required to file Schedule B, including the signature of an Enrolled 
Actuary attesting to the completeness, accuracy, and reasonableness of 
the actuarial calculations, along with an attachment of any clarifying 
material not reported on the schedule itself.[Footnote 14]

Table 2: Filing Requirements for Form 5500, Schedules, and Attachments:

Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 

Form 5500; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete.

Schedule A (Insurance Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if plan has insurance contracts for 
benefits or investments; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete if plan has insurance contracts for 
benefits or investments.

Schedule B (Actuarial Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if defined benefit plan and subject 
to minimum funding standards; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete if defined benefit plan and subject 
to minimum funding standards.

Schedule C (Service Provider Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if a service provider was paid $5,000 
or more and/or an accountant or actuary was terminated; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Not required.

Schedule D (DFE/ Participating Plan Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete Part I if plan participated in a CCT, 
PSA, MTIA, or 103-12 IE; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete Part I if plan participated in a CCT, 
PSA, MTIA, or 103-12 IE.

Schedule E (ESOP Annual Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if ESOP; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete if ESOP.

Schedule G (Financial Transaction Schedules); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if Schedule H, line 4b, 4c, or 4d is 
"Yes."; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Not required.

Schedule H (Financial Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Not required.

Schedule I (Financial Information--Small Plan); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Not required; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete.

Schedule P (Annual Return of Fiduciary of Employee Benefit Trust); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must file to start running of statute of 
limitations under Code section 6501(a); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must file to start running of statute of 
limitations under Code section 6501(a).

Schedule R (Retirement Plan Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete.

Schedule SSA (Annual Registration Statement Identifying Separated 
Participants With Deferred Vested Benefits); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if plan had separated participants 
with deferred vested benefits to report; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete if plan had separated participants 
with deferred vested benefits to report.

Schedule T (Qualified Pension Plan Coverage Information); 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must complete if qualified plan unless permitted to 
rely on coverage testing information for prior year; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Must complete if qualified plan unless permitted to 
rely on coverage testing information for prior year.

Accountant's Report; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Large Pension Plan: Must attach; 
Quick Reference Chart for Form 5500, Schedules, and Attachments[A]: 
Small Pension Plan: Not required unless Schedule I, line 4k, is checked 
"No.".

[End of table]

Source: 2004 Instructions for Form 5500.

[A] This chart provides only general guidance. Not all rules and 
requirements are reflected. Refer to specific Form 5500 instructions 
for complete information on filing requirements.

Form 5500 Reports Are Used for Monitoring Compliance and Enforcement:

Labor, IRS, and PBGC use Form 5500 Reports as a compliance tool to 
identify actual and potential violations of ERISA and the IRC. Each 
agency has a unique statutory responsibility and uses the information 
on the form for monitoring and enforcement purposes. Agency officials 
said that each agency has developed computerized systems that analyze 
the reported information to help them ensure that plans are in 
compliance with applicable laws.

Although Labor officials said that the most effective source of leads 
on violations of ERISA, such as delinquent participant contributions, 
were complaints from plan participants, computer searches and targeting 
of Form 5500 information on specific types of plans account for 
approximately 25 percent of case openings. Labor is currently using 
plan year 2002 and 2003 Form 5500 information for computer targeting. 
Labor officials told us that they open about 4,000 investigations into 
actual and potential ERISA violations annually. Labor officials said an 
early step when opening an investigation is to review the available 
Form 5500 Reports to identify names and contact information for the 
plan, its corporate sponsor, and its plan administrator. Labor 
officials said they use Form 5500 data to enforce ERISA reporting and 
disclosure provisions and fiduciary standards.

IRS officials told us that they use Form 5500 data to examine plan 
financial transactions and to target plans for examination. Pension law 
provides significant tax benefits for sponsors of certain retirement 
plans and the employees that participate in them. IRS enforces certain 
minimum funding requirements of ERISA and the IRC. IRS officials said 
the purpose of IRS examinations is to ensure plan sponsors are making 
contributions to the plan as required, the assets truly exist to 
satisfy the liabilities and are classified properly, and that plans are 
operating in accordance with plan design. IRS can levy penalties, 
taxes, and interest charges as well as completely disqualify a tax- 
exempt plan from tax-exempt status if major violations are found.

In fiscal year 2004, IRS examined more than 10,700 plans and 91 percent 
of these examinations were based solely on Form 5500 information, and 
an additional 5 percent were based in part on Form 5500 information. 
IRS uses its Returns and Inventory Classification System (RICS) to 
select plans for review based on Form 5500 Reports. For example, after 
IRS had determined that a pension practitioner was involved with tax- 
abusive schemes, it used available contact information listed on the 
Form 5500 to create a list of over 400 sponsors who had filed their 
Form 5500 Reports using the address of the practitioner who allegedly 
designed these schemes.

PBGC uses Form 5500 information to monitor both single-employer and 
multiemployer defined benefit pension plan activities, focusing on 
assets, liabilities, number of participants, and funding levels. Form 
5500 information is also used to forecast PBGC's potential liabilities. 
PBGC's data on multiemployer plans currently come only from Form 5500 
Reports, while single-employer plan data are supplemented with 
information obtained from other filings and submissions with the 
government and from corporate annual returns.[Footnote 15] PBGC 
officials said the agency is particularly interested in single-employer 
and multiemployer plans with financial problems. For both types of 
plans, PBGC officials said they maintain a database of financial 
information about such plans drawn from Form 5500 Reports, premium 
filings, and other data in order to determine which plans may be at 
risk of requiring PBGC financial assistance.

PBGC officials also said they use the Form 5500 for participant notice 
and PBGC insurance premium compliance. For example, PBGC reviews Form 
5500 filings to ensure that plan sponsors of underfunded plans report 
sending required participant notices to plan participants notifying 
them of the plan's funding status and the limits of PBGC's guarantee 
benefits. If a participant notice is not issued as required, agency 
officials said they may assess penalties. PBGC officials also said they 
use Form 5500 information on plan type and level of underfunding to 
help ensure that plans are making the appropriate premium payments 
(which vary by type of plan and the extent of underfunding). They also 
said the agency has an "intercept program" arrangement with the EFAST 
processor. Through this program, PBGC has identified over 2,000 plans 
it is most interested in and has made arrangements for copies of these 
Form 5500 filings to be mailed to PBGC before being processed.

Federal Agencies and Others Use Form 5500 Information for Research and 
Statistical Purposes:

Form 5500 information is also used for research and statistical 
purposes. Labor and PBGC officials told us that Form 5500 information 
is an integral part of their policy research. Labor officials said that 
EBSA's Office of Policy and Research (OPR) uses Form 5500 information 
to assist in developing regulations and to prepare its Private Pension 
Plan Bulletin. OPR also uses Form 5500 information to develop aggregate 
pension statistics and conduct economic research on relevant topics. 
OPR officials said they plan and administer an employee benefits 
research and economic analysis program to support EBSA policy and 
program priorities, respond to requests for data and findings, and 
provide technical assistance to EBSA offices, other Labor agencies, and 
external groups. Officials from PBGC's Policy, Research, and Analysis 
Department said they use Form 5500 data to develop policies for PBGC's 
insurance programs and conduct related research and modeling.

SSA is also a direct recipient of Form 5500 Reports. SSA officials said 
they receive information on name and address changes for plan 
administrators and information on mergers from pension plans. Plans 
file the Schedule SSA if they have vested participants who separated 
from the plan during the prior reporting period. SSA officials said 
they use the data to notify those participants or their survivors who 
apply for Social Security that they may have benefits from one or more 
private pension plans.

The Form 5500 is also a source of information that is used by other 
federal agencies. In our discussions with federal agency officials, we 
found they use Form 5500 information for government research and 
preparing government statistics. For example, some federal agencies use 
the information in assessing employee benefits and taxes, determining 
economic trends, and evaluating policies. As shown in table 3, 
different federal agencies use Form 5500 information for different 
purposes.

Table 3: Examples of Federal Agencies That Use Form 5500 Information:

Bureau of Economic Analysis (Department of Commerce): 

* Form 5500 data is incorporated into the compensation of employees 
segment of the National Income and Product Accounts.[A].

Census Bureau (Department of Commerce): 
* Matches Form 5500 data to the Census Bureau's Business Register; 
* Is exploring how the Form 5500 can improve coverage estimates and 
reconcile inconsistencies in the current data collection (the Current 
Population Survey and the Survey of Income and Program Participation).

Congressional Budget Office: 
* Uses Form 5500 information to evaluate the financial condition of 
PBGC; 
* Uses information to assess pension reform issues.

Congressional Research Service: 
* Uses Form 5500 information to conduct pension research; 
* Answer questions from members of the Congress regarding private 
pension plans.

Employee Benefits Security Administration (Department of Labor): 
* Uses Form 5500 information for enforcing ERISA pension requirements; 
* Uses Form 5500 information for research and policy analysis; 
* Discloses Form 5500 information to the public; 
* Publishes aggregate summary information in its annual Private Pension 
Plan Bulletin.

Federal Reserve Board: 
* Primarily uses Form 5500 data for the Flow of Funds financial 
sectors.[B]; 
* Form 5500 data is used as a benchmark for estimating current holdings 
of pension plans; 
* Form 5500 data is also used for other research purposes.

Government Accountability Office: 
* Uses Form 5500 data for pension research; 
* Conducts studies and prepares testimonies for the Congress.

Internal Revenue Service (Department of the Treasury): 
* Enforce ERISA and IRC pension requirements; 
* Conducts studies to identify and monitor pension plan noncompliance.

Joint Committee on Taxation: 
* Uses Form 5500 data in calculating revenue estimates.

Office of Tax Policy (U.S. Department of the Treasury): 
* Uses Form 5500 data in calculating revenue.

Pension Benefit Guaranty Corporation: 
* Uses Form 5500 information for enforcing ERISA pension requirements; 
* Uses Form 5500 information for research, and policy analysis; 
* Uses Form 5500 information to monitor single-employer and 
multiemployer plan activities; 
* Uses Form 5500 information for its Pension Insurance Modeling System 
and Multiemployer Evaluation System; 
* Annually prepares the Pension Insurance Data Book which reports 
summary information on pension plans and PBGC finances.

Social Security Administration: 
* Uses Form 5500 and Schedule SSA information to comply with ERISA and 
Social Security Act requirements; 
* Uses information from the Schedule SSA to notify certain individuals 
that they may be eligible for deferred vested benefits from private 
pension plans.

Source: GAO analysis.

[A] The National Income and Product Accounts provides an aggregated 
view of the final uses of the nation's output, and the income derived 
from its production; two of its most widely known measures are gross 
domestic product (GDP) and gross domestic income (GDI).

[B] The flow of funds accounts measure financial flows across sectors 
of the economy, tracking funds as they move from those sectors that 
serve as sources of capital, through intermediaries (such as banks, 
mutual funds, and pension funds), to sectors that use the capital to 
acquire physical and financial assets. Federal Reserve Board officials 
said they estimate pension plan assets using the latest available 
information from EBSA's Office of Policy Research and are currently 
using 1999 Form 5500 information.

[End of table]

Finally, others outside of the federal government use Form 5500 
information. Pension researchers told us they use Form 5500 information 
to determine employer contributions to defined benefit plans, employer 
pension costs for defined contribution plans, and data on the 
relationship between collective bargaining and pensions. Additionally, 
researchers said they have used information from the Form 5500 to 
determine the extent of cash balance defined benefit plans. Benefit 
consulting firms also use Form 5500 information. Consultants from one 
firm told us they use Form 5500 information for a variety of client- 
sponsored projects such as studying the time it takes an active 
participant to become vested and comparing single-employer with 
multiemployer pension plans. Others said that they repackage and sell 
information from Labor's Form 5500 data after editing it and verifying 
contact information for large plans.

Form 5500 Reports Are Made Available to the Public:

The Form 5500 is also an important public disclosure document. The 
public disclosure of the form is a Labor function required by ERISA. 
According to Labor officials, the form is the only source of detailed 
financial information available to plan participants and beneficiaries, 
who upon written request must be furnished a copy of the plan's latest 
Form 5500 by the plan administrator. Moreover, the form serves as a 
basis for the Summary Annual Report (SAR), which plan administrators 
are generally required to furnish to each participant and beneficiary 
annually.

Labor also maintains a public disclosure room so that Form 5500 Reports 
and related plan information are available to public agencies, private 
organizations and individuals for review. Labor officials said in 
fiscal year 2004, EBSA's Public Disclosure Office received about 1,800 
requests for Form 5500 Reports and provided about 5,200 documents in 
response to these requests. Labor officials said making the form 
publicly available is intended to serve as a deterrent to non- 
compliance with the statutory duties imposed on plan fiduciaries. EBSA 
also makes its Form 5500 research file available in electronic format 
to individuals and groups for research purposes. In addition, separate 
from the research file, an electronic database of all available 
publicly disclosable filings is made available in response to Freedom 
of Information Act requests. Information from Form 5500 Reports is also 
made available through private parties. For example, electronic 
facsimiles of publicly available Form 5500 filings can be obtained free 
of charge at FreeErisa.com.

Statutory Reporting Requirements, Current Processing Methods, and Labor 
Practices Delay the Release of Form 5500 Information:

Statutory reporting requirements, EFAST processing issues, and current 
Labor practices delay the release of Form 5500 information for up to 3 
years in some cases. Current statutory requirements allow plan sponsors 
up to 285 days following the end of their plan year to file their Form 
5500 Reports. Once the reports are filed, processing of the reports is 
slowed by some of EFAST's procedures. Labor's practice of not releasing 
the research file-Form 5500 information in its most practical form- 
until it has processed all forms from a plan year results in further 
delays. Agency officials told us that the timeliness of Form 5500 
Reports affects their use of the information.

Current Statutory Reporting Requirements Limit the Timeliness of Form 
5500 Information:

The length of time plan sponsors have to file their Form 5500 Reports 
is determined by the statutory reporting requirements. Under ERISA, 
plan sponsors have a normal deadline of 210 days after the end of the 
plan year to file and may then apply to IRS for an annual automatic one-
time 2  month extension. Thus, plan sponsors can take up to 285 days 
from the end of the plan year to file their Form 5500 reports. For 
example, as shown in figure 4, for a calendar year plan that ends on 
December 31, a plan sponsor has until July 31 to file the Form 5500. If 
the plan sponsor requests an extension, the new deadline would be 
October 15.

Figure 4: Example of Statutory Deadlines to File Form 5500 for Calendar 
Year Plan:

[See PDF for image]

Note: Labor regulations operationalize the deadline to the end of the 
seventh month after the close of the plan year.

[End of figure]

An additional 45-day extension from the normal statutory deadline is 
also automatically given to corporations receiving an extension on 
their federal income taxes.[Footnote 16] However, an extension granted 
by using this automatic extension procedure cannot be extended further 
by using the one-time 2  month extension. Labor, IRS, and PBGC may 
also grant special extensions of time, beyond the 285 day extended 
deadline, for events such as presidentially declared disasters or for 
service in, or in support of, the armed forces of the United States in 
a combat zone.

The current statutory filing requirements are also intertwined with 
other statutory deadlines relating to private pension plans (See fig. 
5). For example, under ERISA, certain providers, such as insurance 
companies and financial institutions, have 120 days after the plan year 
to provide information to the plan administrator.[Footnote 17] Then, 
under IRC and ERISA, defined benefit plans have up to 8  months after 
the plan year end to make contributions for minimum funding 
purposes.[Footnote 18] Finally, under Treasury regulations, a plan has 
up to 9  months after the end of the plan year to correct any coverage 
or nondiscrimination violations,[Footnote 19] which enables any 
corrections to be made and timely reflected on Schedule T of Form 5500.

Figure 5: Timeline of Statutory Deadlines for a Calendar Year Plan:

[See PDF for image]

Note: Labor regulations operationalize the deadline to the end of the 
seventh month after the close of the plan year.

[End of figure]

Service providers and plan sponsor representatives said that the 210 
day time frame with extensions is necessary, given the amount of 
coordination with other parties that is needed to prepare the form and 
the obstacles that exist. Plan sponsors are ultimately responsible for 
filing the Form 5500. However, industry association representatives 
told us that many plan sponsors are relying heavily on service 
providers to help them prepare the form. In addition, there are 
numerous parties that must provide information to the plan sponsor or 
service provider in order to complete the Form 5500. For example:

* Financial institutions provide information on plan assets held in 
their custody.

* Insurance companies provide information about any benefits provided 
through or investments made with them, including commissions and fees 
paid by the plan sponsor for the year.

* Actuaries are responsible for preparing the Schedule B and attesting 
that the information and any assumptions being presented are both 
reasonable and represent the best estimates of anticipated experience 
under the plan.

* Auditors are required to review plan financial statements as well as 
any books or records of the plan that they deem necessary. This review 
enables them to form an opinion as to whether the financial statements 
and the schedules provided as part of the Form 5500 are presented 
fairly according to generally accepted accounting principles. They also 
provide an opinion as to whether the schedules present the information 
about the plan fairly when examined in conjunction with the financial 
statements as a whole.

Figure 6 shows an example of the coordination and information flow that 
must occur for service providers or plan sponsors to obtain information 
necessary to complete the Form 5500.

Figure 6: Example of Coordination and Information Flow Required for 
Form 5500 Preparation:

[See PDF for image]

[End of figure]

Parties involved in filling out the Form 5500 told us they face 
obstacles that limit the timeliness of form preparation. For example, 
some officials said that plan sponsors are busy preparing their 
corporate taxes, closing their books for the year end, and preparing 
appropriate SEC filings during the first quarter of the year and that 
these things cause them to be unable to provide information for Form 
5500 preparation until March or April at the earliest.

Service providers, who often prepare the Form 5500 on behalf of plan 
sponsors, told us that gathering information from many different 
parties creates numerous obstacles that can delay preparation. Service 
providers said that it can be difficult to receive timely information 
from insurance companies, which is needed to complete the Schedule A. 
Service providers also said that receiving complete census data from 
plan sponsors can be difficult and often leads to delays in form 
preparation because of such problems as merging information from 
different databases, dealing with non-computerized retiree data, and 
identifying vested participants who have left the company. The data 
collection and the analysis of census data are further complicated when 
companies go through mergers, acquisitions, or divestitures, which can 
result in further delays. In addition, service providers said that many 
plan sponsors have outsourced their payroll function, which means that 
they have to get data from another party, which adds additional time.

Actuaries said they face certain obstacles that can affect the 
timeliness of Schedule B preparation for defined benefit plans. These 
officials said the biggest delay is due to funding rules that allow 
plan sponsors to make contributions up to 8  months following the 
close of a plan year. Actuaries said they need to know all of the 
contributions that have been made in order to certify Schedule B of the 
form. In addition, actuaries said they must wait for plan sponsors to 
give them information such as asset valuations, which can take a long 
time to prepare; as a result, they are generally unable to begin 
preparing the Schedule B until May or June at the earliest for calendar 
year plans. In general, actuaries said that once they have all the 
information they need, it typically takes them up to 2 months to 
complete the Schedule B.

Audits are typically the last step in the preparation of the Form 5500 
and can hold up submission of the form in many cases.[Footnote 20] 
Auditors said that scheduling a pension plan audit is often delayed 
because auditors are busy performing corporate year-end audit work and 
preparing corporate tax filings, and therefore they lack the time and 
resources to begin auditing pension plans until after April at the 
earliest. Officials from the larger auditing firms said that once they 
start working on pension plan audits, corporate work still takes 
precedence and if issues relating to a corporate audit arise, the 
pension plan audit will be put on hold. In addition, depending on any 
issues uncovered during the pension plan audit, auditors said they may 
need to go back to the plan sponsors, service providers, actuaries, or 
even the insurance companies and financial institutions to seek 
clarification or additional information. Auditors also said that this 
back and forth can be very time consuming, and sometimes small issues 
can hold up an entire audit. Once the audit is completed, it is 
typically sent back to the service provider, and then the completed 
Form 5500 Report is signed by the plan sponsor and submitted to EFAST 
for processing.

Figure 7 shows an example of the preparation timeline for all the 
parties involved in providing information to the service providers in 
order to prepare Form 5500 Reports, as well as the other requirements 
that the various parties must meet during this time frame.

Figure 7: Example of a Timeline of Form 5500 Preparation for a Calendar 
Year Defined Benefit Plan:

[See PDF for image]

[End of figure]

All of the service providers, actuaries, and auditors we talked to said 
that given all the various commitments of the parties involved in 
preparing the Form 5500, it would be very difficult to shorten the Form 
5500 filing deadline. Even given the current time frame, filings can 
get held up past the deadline and sponsors may be forced to file late. 
For example, if the actuarial report is not prepared in time to finish 
the plan audit by the October 15 deadline, a plan will have no choice 
but to file late or file an incomplete filing. According to statistics 
provided by Labor, 11 percent of all filers in 2001 filed late.

Paper Filings and EFAST Processes Further Affect the Timeliness of Form 
5500 Information:

The submission of numerous paper filings and certain EFAST processes 
limit the timeliness of Form 5500 report processing. Labor officials 
reported that the EFAST system processes approximately 25 million paper 
pages annually and that 98 percent of filers used paper forms in 2001, 
the most recent year for which data are available; this figure is 
consistent with prior years. EFAST officials said that under the 
current system, all filings are sent by the filers to a central 
processing facility in Lawrence, Kansas, operated by an outside 
contractor. Paper filings, once received and properly sorted, are 
scanned using advanced data capture software,[Footnote 21] and in some 
cases must be entered manually if the software is unable to process the 
form. After the forms are processed and scanned, they are run through 
edit checks and any errors are corrected. When the processing of the 
form is considered final, meaning any necessary corrections have been 
made, the information from the form is posted to the EFAST database. 
From there the information is then distributed to Labor, IRS, and PBGC 
on digital media. According to Labor officials, paper filings take more 
than three times as long as electronic filings to process and have 
nearly twice as many errors. As shown in figure 8, the abundance of 
paper filings results in long processing times, which delay the 
availability of the forms to the agencies.

Figure 8: Form 5500 Reports:

[See PDF for image]

[End of figure]

According to Labor officials and the ERISA Advisory Council's[Footnote 
22] working paper on electronic reporting, the electronic filing option 
of the current EFAST system has been underutilized by plan sponsors 
largely because of the fact that electronic filing is entirely 
voluntary.[Footnote 23] In addition, service providers told us there 
are some obstacles to electronic filing. First, they said the current 
process of obtaining an electronic signature and personal 
identification number (PIN) is burdensome and time consuming. For 
example, in order to receive a PIN, a plan sponsor must file a paper 
application with Labor, a process that takes from 3 to 4 weeks. Second, 
plan sponsors also reported that currently there is little economic 
benefit to filing electronically because purchasing the software needed 
for electronic filing can be more costly than generating paper filings, 
with no corresponding benefit. Third parties such as actuaries and 
accountants must sign certain portions of the Form 5500 filings, which 
complicates the electronic filing process. These officials said they 
want to ensure that any information developed by them and attributed to 
them is not changed or altered after it leaves their control. Labor and 
others have made attempts to address these issues. In 2002, the ERISA 
Advisory Council issued a report recommending the use of Web-based 
technologies and requiring that Form 5500 Reports be filed 
electronically.[Footnote 24]

Resolving errors on Form 5500 filings, another paper-based process, can 
add up to 120 days to the processing of a form. EFAST officials said 
that whether a form is submitted in a paper format or electronically, 
the process for resolving errors or problems is paper based. We found 
that the EFAST system locates errors only after a form has been 
processed and seeks to resolve the error by mailing letters to plan 
sponsors. Labor will send up to two letters to receive clarification, 
providing plan sponsors up to 30 days to respond to each letter. In 
addition, Labor officials estimate that it takes roughly 30 days for 
mailing and processing, thereby adding up to 60 days in total for each 
letter to the overall processing time of Form 5500 Reports. Once two 
letters are sent, a filing is marked complete whether a resolution was 
achieved or not. As shown in figure 9, a Form 5500 Report can be 
initially processed by January 15, but if there are errors it may not 
be completed until May 14.

Figure 9: Example of a Form 5500 Being Processed through EFAST with 
Errors:

[See PDF for image]

Note: The processing cycle remains open for 2 years to account for all 
filings, including non-calendar year filings that may be due up to a 
year after the filing used in the above example.

[End of figure]

Labor officials said they initiated EFAST with the hope of achieving 
certain advantages provided by an electronic system, including better 
dissemination of information to the public, better access to data for 
regulatory agencies, and availability of more current data for 
participants and beneficiaries. Currently, Labor is looking into a new 
system to replace EFAST when its contract ends. The new system would 
build on the gains achieved through EFAST, utilizing Web-based 
technologies and mandatory electronic filing, as recommended by the 
2002 ERISA Advisory Council Working Group report on electronic filing.

Labor's Need for Complete and Accurate Filing Records for a Plan Year 
Also Delays the Release of Certain Form 5500 Information:

We found that currently Labor waits until EFAST has processed all 
filings for a plan year before finalizing work on the Form 5500 
research file--Form 5500 information in its most practical form for 
producing aggregate statistics and conducting policy research. Labor 
officials said that waiting for all processing to be completed allows 
Labor to be more accurate and not be forced to use estimates for 
information in the research file. Under EFAST, the processing cycle for 
a plan year lasts 2 years to account for all types of filings, 
including non-calendar year plan filings. Since non-calendar year plan 
filings can be due up to a year later than calendar year plan 
filings,[Footnote 25] the research file is often not available to end 
users until about 3 years after the end of the plan year. For example, 
in plan year 2001, 74 percent of all filings were calendar year plans, 
and for those plans that were filed on time, processing under the EFAST 
contract standards was to be completed by May 13, 2003. Labor began 
work on the 2001 research file in mid-2004. The long delay in releasing 
the research file results in a lack of timely information on the 
current state of pension plans for policy makers and researchers.

The need for adjustments to the EFAST system and the switch to an 
outside contractor, Actuarial Research Corporation (ARC), to prepare 
the research file have also delayed the release of the research file. 
Officials from ARC told us that part of the recent delays in releasing 
the 1999 Form 5500 research file is that the switch to EFAST in 1998 
resulted in changes to the way that the data are collected and 
therefore new processes were required to develop the research file. In 
addition, Labor has included new variables that are not in the raw 
dataset, adding more time. Plan year 2000 marks the first year that the 
research file will be produced by ARC; previously the file was produced 
within Labor. Because of the long delay in releasing the 1999 research 
file, ARC has gotten off to a delayed start on subsequent years. ARC 
officials said that they are currently working on the 2000, 2001, and 
2002 research files. ARC officials also said that there is a 
significant learning curve associated with preparing the research file, 
and therefore they expect the time frame needed to prepare the research 
file to be shorter in the future. They estimated that once the 
processes for developing the file are in place, it should take roughly 
4 months to produce a preliminary version. As shown in figure 10, they 
began work on the 2000 research file in early 2004 and expect to 
release it in the summer of 2005.

Figure 10: Timeline for the Preparation of the 2000 Form 5500 Research 
File:

[See PDF for image]

[End of figure]

The Timeliness of Form 5500 Reports Affects Federal Agencies' Use of 
the Information:

Although Labor, IRS and, PBGC have access to the Form 5500 information 
sooner than other federal agencies and the general public, the agencies 
are affected by the long processing times for paper filings and EFAST's 
paper-based correction process. Each agency receives processed Form 
5500 information on individual filings on a regular basis once a form 
is completely processed, which means that any necessary corrections 
have been made. As stipulated in the EFAST contract, IRS and PBGC 
receive weekly updates of processed Form 5500 information, while Labor 
and SSA receive updated information on a monthly basis. These agencies 
are also able to view images of the forms immediately after being 
scanned by EFAST. However, agency officials told us that as with the 
release of the Form 5500 research file, they still have to wait for a 
sufficiently complete universe of plan filings from any given plan year 
to be processed in order to begin their compliance targeting programs.

Federal agency officials said that old Form 5500 information may paint 
a distorted picture of the current financial condition of defined 
benefit pension plans. The value of plan assets can change 
significantly over a period of time, and the value of plan liabilities 
can also change because of changes in interest rates, plan amendments, 
layoffs, early retirements, and other factors. For plans that 
experience a rapid deterioration in their financial condition, the 
funding measures may not reveal the true extent of a plan's financial 
distress to relevant federal agencies and plan participants.

Federal agency officials also said that it would be useful to have 
certain Form 5500 information reported prior to the lengthy Form 5500 
filing deadline. For example, Labor, IRS and PBGC officials told us 
that Form 5500 Schedule B information, including information about a 
defined benefit pension plan's funding status, is outdated by the time 
it is filed. As a result, these agencies are not notified of a plan's 
funding status until almost 2 years after the actual valuation date. 
These officials said this makes the Form 5500 an unreliable tool for 
determining a plan's current funding financial condition. They also 
told us other information could be reported earlier than the filing 
deadline, including Schedule H and I information, which would provide 
them with more timely plan financial information, including plan assets 
and liabilities.

Labor, IRS, and PBGC officials told us that because of the timeliness 
of the information received, their ability to carry out various 
statutory responsibilities is hampered. Labor officials said that, in 
some cases, untimely Form 5500 Reports affects their ability to 
identify financially troubled plans whose sponsors may be on the verge 
of going out of business and abandoning their pension plans, because 
these plans may no longer exist by the time that Labor receives the 
processed filing or is able to determine that no Form 5500 was filed by 
those sponsors. IRS officials said the timeliness of Form 5500 Reports 
also affects their enforcement efforts, because the IRS has a 3 year 
statute of limitations. These officials said that working with older 
Form 5500 information raises the time and cost required to complete an 
investigation because retrieving the required information becomes more 
difficult with each passing year. Finally, the timeliness of Form 5500 
reporting affects PBGC's ability to monitor multiemployer plans. PBGC 
officials said that it is a challenge to get current information on the 
stability of defined benefit pension plans, especially multiemployer 
plans, because of the unavailability of current Form 5500 data. 
Multiemployer plan data come only from Form 5500 Reports and are much 
less current and complete than single-employer plan data-such data are 
generally 2 to 3 years older. According to PBGC officials, a major 
reason for this is that PBGC can identify the corporate sponsor of a 
single-employer plan from the Form 5500 and is often able to obtain 
financial information from the sponsor's corporate 10-K filing. They 
said obtaining such data is not possible for multiemployer plans 
because participating corporate employers cannot be identified from 
Form 5500 information.

Officials from other federal agencies that use Form 5500 information 
also told us that the information is not current, a fact that affects 
their ability to use the information to conduct program activities, 
inform policy makers, and evaluate the condition of the private pension 
plan universe. Some federal agency officials told us that they would 
develop modeling programs to explore more uses of Form 5500 information 
if it were available in a timelier manner.

Despite Efforts to Improve Its Content, the Form 5500 Lacks Key 
Information:

Labor, IRS, and PBGC have taken steps to improve the content of the 
Form 5500, including reviewing the form annually and revising the 
content as needed to ensure that the form is collecting all required 
information while not overburdening plan sponsors. Despite the content 
changes that have been made, the Form 5500, in its current form, lacks 
key information that could better assist Labor, IRS, and PBGC in 
tracking and identifying plans from year to year and monitoring 
multiemployer plans. In addition, federal agency officials and 
researchers that use Form 5500 information said the form has not kept 
pace with changes in the private pension universe. Although federal 
agency officials and others said the form lacks certain information, 
pension practitioners and service providers told us that it could be 
further streamlined by removing certain items and consolidating 
schedules.

Federal Agencies Have Taken Steps to Improve the Content of Form 5500 
Information:

Labor, IRS, and PBGC annually review and revise Form 5500 content as 
needed to ensure that the form is collecting all information required 
under ERISA. These agencies conduct a review of the Form 5500 as part 
of the process by which they publish updated versions of the form and 
its instructions on an annual basis. The agencies receive public input 
throughout the course of the year from interested parties, such as plan 
sponsors and service providers, either asking questions about the form 
or suggesting areas where the instructions can be improved. Federal 
agency officials told us that these questions and comments are taken 
into account as part of the annual process of reviewing the Form 5500.

Agency officials said the process of revising the form, which can 
include adding or removing items, can be triggered by a number of 
events, such as a statutory requirement to change the form or a 
requirement for agencies to collect certain information. Revisions to 
the form can also result from recommendations from entities such as the 
ERISA Advisory Council. After the triggering event, if the respective 
agency deems that a change is appropriate, it starts the process of 
developing the proposed change. The proposed change then goes through 
an approval, public comment, and clearance process at the agency level 
and the Office of Management and Budget (OMB). The process provides the 
general public and federal agencies an opportunity to comment on the 
proposed changes as well as helping to ensure, among other things, that 
any additional information can be reported in a way that minimizes 
respondent reporting burden (time and financial resources). The process 
to change the Form 5500 can take anywhere from 1 to 2 years, depending 
on the nature of the revisions.

Efforts to minimize plan sponsors' reporting burden may limit the 
collection of Form 5500 information. Legislation requires OMB to review 
forms before they are used to collect data. The Paperwork Reduction Act 
of 1995 (Pub. L. No. 104-13) and similar previous legislation[Footnote 
26] are designed to minimize the paperwork burden on the public while 
at the same time recognizing the importance of information to the 
successful completion of agency missions. The act requires OMB to 
approve all existing and new collections of information by federal 
agencies. In approving agency collection efforts, OMB must weigh the 
burden to the public against the practical utility of the information 
to the agency. Revisions to the Form 5500 can also include eliminating 
duplicate or obsolete items. Agency officials said that they were 
reluctant to propose additional Form 5500 data collection unless they 
could clearly establish that the benefit outweighed the perceived 
burden. They also said that efforts to reduce existing data collection 
requirements sometimes result in a loss of information.

Over the years Labor, IRS, and PBGC have made revisions to the Form 
5500. The last major revision occurred in 1999, as part of a multiyear 
project, and followed Labor, IRS, and PBGC's evaluation of public 
comments on their 1997 proposal from employer groups, employee 
representatives, financial institutions, service providers, and 
others.[Footnote 27] This resulted in these three agencies, in an 
effort to streamline the form, replacing the Form 5500, Form 5500-C, 
and Form 5500-R with one Form 5500 (the current form) to be used by all 
filers as well as more detailed schedules customized to each filer's 
type of plan. In addition, the revisions eliminated duplicate or 
obsolete items. Since 1999, other annual revisions have included 
clarifying the Form 5500, its schedules, and instructions; adding items 
on Employee Stock Ownership Plans, frozen plans, and floor offset 
plans; removing items concerning delinquent participant contributions 
and fringe benefit plans; and changing the small plan audit 
requirements.

Other changes have been proposed that relate to information associated 
with the Form 5500. In January 2005, the Secretary of Labor announced 
the Administration's proposal to improve retirement security. The 
proposal presented three areas of change, one of them to increase the 
disclosure of information about private, single-employer defined 
benefit pension plans to workers, investors, and regulators.[Footnote 
28] The proposal would increase disclosure in four ways: (1) reporting 
ongoing and at-risk liability on the Form 5500, (2) shortening the 
deadline for the Schedule B report of the actuarial statement, (3) 
publicly disclosing Section 4010 information, and (4) expanding the 
information reported on the SAR.

The Form 5500 Still Lacks Key Information:

The Form 5500 lacks key information that could better assist Labor, 
IRS, and PBGC in monitoring plans and ensuring that they are in 
compliance with the law. Federal agency officials and pension 
researchers acknowledge that the form does not collect certain 
information, such as information that could help them to better track 
plans from year to year, and certain information on multiemployer plans 
and defined contribution plans.

Labor, IRS, and PBGC officials said that they have experienced 
difficulties when relying on Form 5500 information to identify and 
track all plans across years. Although these agencies have a process in 
place to identify and track plans filing a Form 5500 from year to year, 
problems still arise when plans change employer identification numbers 
(EIN) and/or plan numbers. Currently, Labor, IRS, and PBGC use the EINs 
and plan numbers listed on the form to identify and track individual 
plans from one year to the next.[Footnote 29] However, officials from 
these agencies reported they are having problems using EINs and plan 
numbers to consistently and accurately track all plans because many 
employers have numerous plans and each plan files Form 5500 Reports 
using the same EIN. As a result, only the three-digit plan number 
assigned by the plan administrator uniquely identifies plan filings 
that have identical EINs. However, when plan administrators do not file 
their Form 5500 with the same plan number each year, absent a unique 
EIN, it is difficult for federal agencies to track the same plan from 
year to year. Identifying plans is further complicated when plan 
sponsors are acquired, sold, or merged. In these cases, agency 
officials said that there is an increased possibility of mismatching of 
EINs, plans, and their identifying information.

Agency officials also told us that without a reliable way to identify 
and track plans a number of problems occur. For example, Labor 
officials said they are unable to (1) verify if all required employers 
are meeting the statutory requirement to file a Form 5500 annually, (2) 
identity all late filers, and (3) assess and collect penalties from all 
plans that fail to file or are late. IRS officials said that EINs 
reported on the Form 5500 do not always match EINs listed on a 
corporate tax return of a business; this makes it difficult for IRS to 
individually match businesses' Form 5500 Reports with their corporate 
tax returns. PBGC officials said they must spend additional time each 
year trying to identify and track certain defined benefit pension plans 
so that they can conduct their compliance and research activities. 
Furthermore, other federal agencies and researchers said that the 
inability to identify and track plans limits their ability to 
effectively identify all of the pension plans associated with a 
particular company, track changes over time in certain types of pension 
plans, and match Form 5500 information with other data sources. Labor, 
IRS, and PBGC officials said they are considering measures to better 
track and identify plans but have not reached any conclusions.

We were also told that the Form 5500 lacks certain information on 
multiemployer plans that would enable PBGC, other federal regulators, 
and pension researchers to (1) identify all of the participating 
employers in a particular multiemployer plan; (2) determine a 
multiemployer plan's basis for making contributions; and (3) determine 
the amount of unfunded liabilities attributable to each participating 
employer. Currently, the form does not collect information that 
identifies the employers participating in a particular multiemployer 
plan. Thus, PBGC and other regulators are unable to identify all the 
employers upon whose financial health multiemployer plans depend or 
link the financial health of these employers to the condition of the 
particular multiemployer plans that these employers are participating 
in. PBGC officials said they are unable to gauge the full impact that 
events such as employer bankruptcies, withdrawals, and labor strikes 
would have on multiemployer plans, their participants, and the agency's 
multiemployer insurance program, which they emphasized as important, 
given that with multiemployer plans, an employer's pension liabilities 
can be affected by the financial health of other employers in the plan. 
The form also lacks information that shows a multiemployer plan's basis 
for employer contributions, which means that PBGC cannot determine the 
impact that events, such as labor strikes, would have on an employer's 
ability to make plan contributions and its effect on the financial 
condition of that particular plan. Finally, the Form 5500 does not 
capture information on each participating employer's responsibility for 
unfunded liabilities. Thus, PBGC is unable to assess the financial risk 
to an insured multiemployer plan posed by the financial collapse or 
withdrawal of one or more contributing employers, which PBGC officials 
said is an important piece of information because of its role in 
monitoring multiemployer plans for financial problems, providing 
financial and technical assistance to troubled plans and guaranteeing a 
minimum level of benefits to participants in insolvent multiemployer 
plans.[Footnote 30] PBGC officials said that the agency needs relevant 
information on multiemployer plans to fully assess the financial health 
of and potential risks faced by multiemployer plans, and they said that 
this information is currently lacking on the Form 5500. PBGC officials 
also said they are exploring ways to obtain more useful information on 
multiemployer plans. However, their plans are still in the 
developmental stages. In addition, officials from Labor, IRS, and other 
federal agencies and pension researchers said it would be useful if the 
Form 5500 captured more information on multiemployer plans.

Federal and Private Sector Researchers Said the Form 5500 has Not Kept 
Pace with Changes in the Private Pension Universe:

Federal and private sector researchers said the Form 5500 has not kept 
pace with changes in the private pension universe, where defined 
contribution plans have become the more prevalent type of private 
pension plan offered by employers and more employees are increasingly 
being covered by defined contribution plans. They said the Form 5500 is 
geared more toward defined benefit plans rather than toward defined 
contribution plans and suggested that the form could collect detailed 
information on the range of investment options that are available to 
participants (employer securities and mutual funds), 401(k) plan 
matching contributions, employee contribution limits, as well as more 
detailed information on the asset allocations of pooled accounts. They 
also said that the form could collect better information to determine 
the true cost of administering a defined contribution plan and 401(k) 
plan fees. For example, the ERISA Advisory Council Working Group 
recently reported that the Form 5500, as currently structured, does not 
reflect the way that the defined contribution plan fee structure works. 
The Advisory Council concluded that Form 5500s filed by defined 
contribution plans are of little use to policy makers, government 
enforcement personnel, plan sponsors, and participants in terms of 
understanding the cost of a plan. The Advisory Council also recommended 
that Labor modify the Form 5500 and the accompanying schedules so that 
total fees incurred either directly or indirectly by these plans can be 
reported or estimated.[Footnote 31] This information could be used for 
research or regulatory purposes.

In addition to having more information on defined contribution plans, 
federal and private sector researchers also said that it would be 
useful if information reported on Section 4010 filings, such as 
information about the ability of a defined benefit plan to meet its 
obligations to participants if the plan were to be terminated,[Footnote 
32] were captured on the Form 5500. Section 4010 filings (named after 
the ERISA section that requires companies to submit such reports) also 
include proprietary information about the plan sponsor and its pension 
assets. However, this information is available only to PBGC and by law 
may not be publicly disclosed. Some officials told us that participants 
should be provided with the necessary information, including Section 
4010 data, to inform them when their plan is underfunded and when the 
sponsor's financial condition may impair the ability of the company to 
fund or maintain the plans.

Pension Practitioners and Others Said the Form Can Be Further 
Streamlined:

Despite federal agencies' attempts to streamline the form, pension 
practitioners and service providers said that the Form 5500 can be 
further streamlined by removing duplicate items and consolidating 
certain schedules. Pension practitioners and service providers told us 
that opportunities exist to modify and consolidate certain financial 
schedules and provided us with recommendations that in their opinion 
would better capture relevant information about pension plans for the 
federal government, participants, plan sponsors, and pension 
practitioners, as shown in table 4. However, Labor, IRS, and PBGC 
officials told us that, to some extent, they use all of the information 
reported on the Form 5500. In addition, pension researchers told us 
that removing certain information from the form, such as plan financial 
information, may limit their ability to use the form for research and 
statistical purposes.

Table 4: Recommendations from Pension Practitioners and Service 
Providers for Further Streamlining the Form 5500:

Financial Schedules: 

Schedule A-Insurance Information; 
* Schedule A commission information could be captured on the Form 5500; 
* Items relating to the reporting of Pooled Separate Accounts on 
Schedule A could be removed since the information is already required 
to be reported for Schedule D.

Schedule D-Direct Filing Entities/Participant Plan Information; 
* Schedule D could be limited to reporting information by Direct Filing 
Entities; 
* Plans that invest in Direct Filing Entities should not file Schedule 
D because the current reporting format is very cumbersome and it does 
not appear to provide useful information to plan sponsors, 
participants, and the government.

Schedule G-Financial Transaction Schedules; 
* Schedule G should be discontinued because this information appears in 
supplemental schedules that is a required part of the auditor's report; 
* Information that appears in the auditor's report, including footnotes 
and supplemental schedules, should not be duplicated on the Form 5500 
or its schedules since its considered part of the Form 5500 filing.

Schedule P-Annual Return of Fiduciary; 
* Schedule P should be removed and have the filing of the Form 5500 
start the statute of limitations instead of the signing of Schedule P. 
However, eliminating the Schedule P would require changes to the 
current statutory framework.

Schedules H and I-Financial Information; 
* Schedules H and I can be simplified into a single format because some 
information on these schedules is already provided in the auditor's 
report.

Benefit Schedules: 

Schedule B-Actuarial Information; 
* Schedule B attachments could be eliminated or the actuarial valuation 
report substituted for the attachments.

Schedule E-ESOP Annual Information; 
* Schedule E could be streamlined by capturing some of its information 
using codes on the Form 5500.

Schedules R (Retirement Plans Information) and T (Qualified Pension 
Plan Coverage); 
* Schedules R and T could be modified to codes on the Form 5500; 
* Questions 1 and 2 on the Schedule R relating to distributions could 
be moved to Schedules H and I, which would eliminate the need to file 
the Schedule R for every plan.

Source: Pension practitioners and service providers.

[End of table]

Conclusions:

The Form 5500 is the primary source of information available concerning 
the operation, funding, assets, liabilities, and investments of private 
pension plans. Because these data are important to enforcement of 
federal pension laws and to pension policy development, it is important 
that Form 5500 information be timely and useful. Changes in the private 
pension world illustrate why improvements to the Form 5500 and its 
processing are so important. For example, the private pension 
environment has been changing fundamentally in the types of plans 
offered today's workers, yet little has been done to reflect these 
changes in the types of data collected. In addition, the sudden 
deterioration in funding levels for some large defined benefit plans 
has brought financial pressures to PBGC and led to calls for 
comprehensive reforms, but Form 5500 data are not timely enough to help 
policy makers in developing effective responses. Untimely pension plan 
information forces policy makers to make key pension policy decisions 
based on data that are about 3 years old. It also hampers regulators' 
ability to enforce ERISA and other laws and results in users getting an 
outdated picture of the financial condition of the private pension plan 
environment.

Although Labor has made significant progress in implementing EFAST, 
more should be done to reduce the time it takes to process and release 
usable computerized Form 5500 information. Changes to the current 
system, such as utilizing its electronic filing capabilities and 
improving its paper-based correspondence process, could speed up the 
processing of Form 5500 Reports and provide more timely data for all 
users. Alternatively, certain types of information could be reported 
earlier than the current filing deadline, such as information on a 
plan's funding status, which could also provide regulators with more 
timely information.

Content issues also remain a problem, despite Labor's, IRS's, and 
PBGC's periodic revisions to the form. Information currently collected 
on the form, while useful to some extent, does not permit these 
agencies to be in the best position to ensure compliance with federal 
laws and accurately assess the financial condition of private pension 
plans. Given the increase in the number of defined contribution pension 
plans and the need for relevant information on multiemployer plans, 
providing better information on these plans would help policy makers 
and others make informed decisions about the financial risks posed by 
private pension plans. However, any improvement to the content of the 
Form 5500 must be done in such a way that does not pose an undue burden 
on plan sponsors.

Recommendations:

Given the improved timeliness and reduced errors associated with 
electronic filing, Labor, IRS, and PBGC should require the electronic 
filing of the Form 5500. In doing so, Labor should also make 
improvements to the current electronic filing process to make it less 
burdensome, such as revising the procedure for signing and 
authenticating an electronic filing.

To improve timeliness, reduce errors, and maximize efficiency, Labor 
should modify its current EFAST processing methods. In doing so, the 
following steps should be considered:

* Labor should streamline its data correction processes by ensuring 
that filings are checked for errors before they are accepted for 
processing by the EFAST system.

* It should develop an electronic-based correspondence process, whereby 
the agencies can notify filers of errors electronically, thereby 
eliminating the 30 days that officials at Labor estimate it takes to 
mail the paper-based correspondence back and forth. Also this will 
allow for filers to be notified of errors on a more timely basis.

Considering the need for federal agencies, Congress, and the public to 
have access to timely and usable Form 5500 information as soon as 
possible, we recommend that Labor evaluate ways to speed up the release 
of its research file, including considering making information 
available from the file on an interim basis prior to its completion and 
final release to the public.

To more effectively identify and track individual plans across years, 
especially when plans change EINs and plan numbers, and to take into 
account Labor's need to be able to verify if all required employers are 
meeting the statutory requirement to file a Form 5500 annually, we 
recommend that Labor, IRS, and PBGC work collectively to better 
identify and track the same plan from one year to the next.

To improve the federal government's ability to regulate multiemployer 
defined benefit pension plans and improve participant information, we 
recommend that Labor, IRS, and PBGC modify the Form 5500 to collect 
additional information on multiemployer pension plans that would enable 
Labor, IRS, and PBGC to monitor and manage potential risks associated 
with events such as employer bankruptcies, withdrawals, and labor 
strikes and the attendant consequences for these plans, plan 
participants, and PBGC's multiemployer insurance program. In doing so, 
Labor, IRS, and PBGC should consider requiring multiemployer plans to 
report the following information on the Form 5500:

* information sufficient to identify all of the employers associated 
with a particular plan and their annual contributions to the plan,

* plan specifics on determining employer contributions (per hour, per 
unit of output, etc.), and:

* the distribution by employer of responsibility for unfunded or 
underfunded plan liabilities.

Agency Comments:

We provided a draft of this report to Labor, PBGC, IRS, and SSA. Labor, 
PBGC, and IRS provided written comments, which appear in appendix I, 
appendix II, and appendix III. Labor's, PBGC's and IRS's comments 
generally agree with the findings and conclusions of our report. Labor, 
PBGC, IRS, and SSA also provided technical comments on the draft. We 
incorporated each agency's comments as appropriate.

Labor suggested that we clarify our assertion that the Form 5500 could 
collect information that could help agencies better identify and track 
plans across years. Labor stated that the Agencies currently apply 
computerized "entity control" tests to Form 5500 filings as part of the 
EFAST processing system that are designed to track individual plans and 
determine if consistent identifying data are reported each year for a 
particular filer in order to maintain accurate year-to-year records for 
each filer. We have clarified that section of our report by noting that 
the agencies' have a system in place to identify and track plans and 
the shortcomings of this method. However, although a system is in place 
to track plans from year to year, officials from all the principal 
agencies said that it is very difficult to track plans from year to 
year if plans change EINs and plan numbers.

Labor and PBGC suggested that the section of our report on the 
timeliness of available Form 5500 information further clarify that 
generally individual Form 5500 filings are made available for 
enforcement and for public disclosure as soon as they are processed by 
EFAST. We agree and did note that in the appropriate section of the 
report. We have also revised our report in various sections to state 
that Form 5500 information is available for enforcement and public 
disclosure purposes prior to the release of the Form 5500 research file.

PBGC proposed an additional recommendation regarding the timeliness of 
defined benefit pension plan funding information reported on Form 5500 
Schedule B. The Administration's pension reform proposal includes a 
provision that would advance the reporting date for the Schedule B to 
February 15 for certain large defined benefit plans. We agree with PBGC 
that advancing the reporting date for the Schedule B to provide more 
timely information on such plans to Labor, IRS, and PBGC could be an 
important piece of comprehensive pension reform.

IRS specifically stated that, with electronic filing, EFAST can 
validate filings as received, reject filings with errors or incomplete 
responses, and minimize or eliminate error correction using electronic 
correspondence. IRS also stated its support for our recommendations to 
require the electronic filing of Form 5500 Reports, evaluate ways to 
better identify and track plans from year to year, and to modify the 
Form 5500 to collect additional information on multiemployer pension 
plans.

We are sending copies of this report to the Secretary of Labor, the 
Commissioner of Internal Revenue, the Executive Director of the Pension 
Benefit Guaranty Corporation, the Commissioner of Social Security, 
appropriate congressional committees, and other interested parties. We 
will also make copies available to others on request. In addition, the 
report will be available at no charge on GAO's Web site at 
http://www.gao.gov.

If you have any questions concerning this report please contact me at 
(202) 512-7215 or Tamara Cross at (202) 512-4890. Other contacts and 
acknowledgments are listed in appendix IV.

Signed by: 

Barbara D. Bovbjerg: 
Director, Education, Workforce, and Income Security Issues:

List of Congressional Committees:

The Honorable Charles E. Grassley: 
Chairman: 
The Honorable Max S. Baucus: 
Ranking Minority Member: 
Committee on Finance: 
United States Senate:

The Honorable Michael B. Enzi: 
Chairman: 
The Honorable Edward M. Kennedy: 
Ranking Minority Member: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate:

The Honorable John A. Boehner: 
Chairman: 
The Honorable George Miller: 
Ranking Minority Member: 
Committee on Education and the Workforce: 
House of Representatives:

The Honorable William M. Thomas: 
Chairman: 
The Honorable Charles B. Rangel: 
Ranking Minority Member: 
Committee on Ways and Means: 
House of Representatives:

[End of section]

Appendix I: Comments from the Department of Labor:

U.S. Department of Labor:	
Assistant Secretary for Employee Benefits Security Administration: 
Washington. D.C. 20210:

May 20, 2005:

Barbara D. Bovbjerg:
Director, Education, Workforce and Income Security Issues: 
United States Government Accountability Office: 
Washington, D.C. 20548:

Dear Ms. Bovbjerg:

Thank you for affording the Department of Labor the opportunity to 
review the Government Accountability Office's (GAO) draft report 
entitled "Government Actions Could Improve the Timeliness and Content 
of the Form 5500 Pension Information." This letter provides comments on 
the recommendations contained in the draft report: technical comments 
were provided directly to you and your staff.

In general. we believe the subject report provides a good overview of 
the Form and its use by the Department of Labor. Pension Benefit 
Guaranty Corporation (PBGC) and Internal Revenue Service (IRS). as well 
as plan participants and beneficiaries, other Federal agencies and 
members of the research community. We also believe the report provides 
a good overview of the current forms processing system (EFAST) and the 
impediments to receiving timely information.

With regard to the content of the Form 5500, we note the GAO's 
assertion that the form "lacks key information that could better assist 
[the] three agencies in monitoring plans and ensuring that they are in 
compliance with the law." The Agencies review the Form 5500 annually 
and revise the content as needed to ensure the collection of relevant 
information. As part of this review, the Agencies individually and 
collectively determine what information they need on the Form 5500 to 
carry out their respective responsibilities and adjust the Form as 
appropriate. This review necessarily entails consideration of the 
benefits of the requested information to the Agencies, as well as plan 
participants and beneficiaries. and the costs and burdens on filers 
attendant to filing the requested information and the costs to the 
government of systems and other modifications attendant to receiving 
and processing the requested information. In no event, however. would 
the Agencies not include information on the form determined to be 
necessary to the carrying out of their respective statutory obligations.

GAO recommends in its report that the Agencies work collectively to 
develop a system that helps them track individual plans from year to 
year and verify if all required employers are meeting their statutory 
obligation to file a Form 5500 annually. We note that the Agencies 
currently apply computerized "entity control" tests to Form 5500 
filings as part of the EFAST processing system that are designed to 
track individual plans and determine if consistent identifying data are 
reported each year for a particular filer in order to maintain accurate 
year-to-year records for each filer. The Agencies will continue to work 
together to explore means by which to monitor compliance with the 
annual reporting requirements. In this regard, we should note that over 
the last three years 36.600 delinquent filers have been brought into 
the filing system through our Delinquent Filer Voluntary Compliance 
Program.

GAO also recommends that the Form 5500 be modified to collect 
additional information on multiemployer defined benefit pension plans, 
including information sufficient to identify all of the employers 
associated with a particular plan and their annual contributions; plan 
specifics on determining employer contributions (per hour, per unit of 
output, etc.) and the distribution of employer responsibility for 
unfunded or underfunded plan liabilities. As noted in the report, the 
PBGC is currently exploring ways to obtain more useful information 
about multiemployer plans and we will consider GAO's recommendation in 
that context.

Concerning the Form 5500 research file, the report emphasizes the 
importance of the Form 5500 research file and says that this file is 
"often not available to end users until about 3 years after the end of 
the plan year." The Department agrees that the research file is an 
essential product. The research file is a specialized version of Form 
5500 information designed to support the production of aggregate 
pension statistics and conduct of pension-related economic and policy 
research. Its annual production generally involves editing, assembling 
and assigning statistical weights to a year's worth of EFAST-processed 
pension filings. The Department is undertaking efforts to eliminate 
avoidable delays in its production and release, and is confident that 
substantial improvements can be made. The Department agrees with GAO 
that elimination of paper filings in favor of universal electronic 
fling has the potential to help improve the timeliness of the research 
file.

It is important to note, however. that the Department currently 
delivers Form 5500 information more promptly for other purposes through 
other pipelines. Generally, individual filings are made available for 
enforcement and for public disclosure as soon as they are processed by 
EFAST. (They are also made immediately available to PBGC and IRS.) As 
part of EBSA's public disclosure program, an electronic database of all 
disclosable EFAST-processed filings is available to the staff of EBSA's 
Public Disclosure . Office to respond to public requests for filings 
and to FOIA requests for data files. The research file is neither 
intended nor suited for enforcement or public disclosure purposes, and 
the timing of its release does not hinder the Department's performance 
of its pension enforcement and public disclosure functions.

TO reduce filer errors and improve the timeliness of fled information, 
the GAO recommends that the Agencies require the electronic filing of 
the Form 5500. In doing so, the GAO indicates that the current filing 
process (EFAST) should be improved to make the electronic filing 
process more streamlined and less burdensome. Specific steps identified 
in the report include: revising the electronic signature process; 
streamlining the data correction process by ensuring filings are 
checked for errors prior to submission; development of an electronic-
based correspondence system for notifying filers of errors; and 
evaluating ways to speed up the release of Form 5500 data to the 
public. 

The Department, in coordination with the IRS and PBGC, is reviewing the 
current EFAST system. EFAST, in its current form, is outdated and needs 
to be replaced. The current EFAST system receives and processes 
approximately 1.4 million flings annually. As noted in the report, 
these filings translated into approximately 25 million paper pages for 
the 2002 plan year. While 87 percent of the 2002 filers used some form 
of software to prepare their filings, only l percent actually submitted 
their filing electronically. As also noted in the report. the rate of 
errors in non-electronically submitted filings is more than twice that 
in electronically filed documents. It is clear that there are 
inefficiencies inherent in the maintenance of any form of a paper 
filing system - a large number of filer errors, increased likelihood of 
correspondence and penalties, and delays in reviews of filings and 
release of data to the public. These inefficiencies not only result in 
increased costs to filers, the government and taxpayers generally, but 
also result in increased risks to the benefit security of participants 
and beneficiaries due to erroneous data or delayed enforcement.

Consistent with GAO's recommendation. the Agencies believe that the 
only effective means by which to address the inefficiencies in the 
current EFAST system is to move to a wholly electronic system for the 
receipt and processing of Form 5500 data. As part of the EFAST review 
process, the Agencies currently are considering approaches to 
implementing a wholly electronic filing system. As we move forward to 
update the EFAST system, we are committed to addressing impediments to 
electronic filing, such as the process by which electronic signatures 
are obtained. and streamlining the data correction and correspondence 
processes. An updated and streamlined process will ensure that timely 
and useable employee benefit plan data is available to the Agencies, 
participants and beneficiaries, researchers and the general public as 
soon as possible.

Again, thank you for the opportunity to submit comments on the report.

Sincerely.

Signed by: 

Ann L. Combs: 

[End of section]

Appendix II: Comments from the Pension Benefit Guaranty Corporation:

Pension Benefit Guaranty Corporation: 
1200 K Street, N.W., 
Washington, D.C. 20005-4026:

Office of the Executive Director:

MAY 20 2005:

Barbara D. Bovbjerg:
Director, Education, Workforce And Income Security Issues:
U. S. Government Accountability Office: 
Washington, D.C. 20548:

Dear Ms. Bovbjerg:

Thank you for providing the Pension Benefit Guaranty Corporation with a 
draft copy of your report "Private Pensions: Government Actions Could 
Improve the Timeliness and Content of Form 5500 Pension Information." 
We appreciate the opportunity to comment.

The report fairly describes the content of the Form 5500 and Schedules 
and of the EFAST processing procedures. In general, the report presents 
an accurate picture of the issues related to the current Form 5500 
package. We especially agree that electronic filing of the Form 5500 
will reduce errors and speed processing time after the forms are 
received.

However, we believe an even more important issue is the timeliness of 
the pension funding information required to be reported as part of the 
Form 5500. Electronic filing does not address the problem that the 
pension funding data needed to monitor the financial condition of the 
plans we insure may be almost two years old when filed. Given the 
dynamic nature of financial markets and rapidly changing business 
conditions, it is critically important that all stakeholders in the 
defined benefit system have more timely information about the financial 
status of pension plans. In this regard, the Administration's pension 
reform proposal includes a provision that would advance the reporting 
date for the Schedule B to February 15th for large defined benefit 
plans that are subject to quarterly contribution requirements. While 
some of these Schedule B's would have to be amended to account for 
subsequent employer contributions, PBGC would have timelier access to 
the asset and liability data it needs to better monitor the financial 
condition of these plans. We would strongly encourage the GAO to 
include this needed change as part of its recommendations.

We are pleased that the report recognizes the need for better 
information about multiemployer plans. The PBGC currently is 
considering what information it needs concerning such plans and the 
best means for the collection of that information.

We have several technical comments that will be provided directly to 
your staff. Thank you again for providing us the opportunity to comment 
on this important study.

Sincerely,

Signed by: 

Bradley D. Belt: 

[End of section]

Appendix III: Comments from the Internal Revenue Service:

DEPARTMENT OF THE TREASURY: 
INTERNAL REVENUE SERVICE: 
WASHINGTON, D.C. 20224:

COMMISSIONER:

May 20, 2005:

Ms. Barbara D. Bovbjerg:
Director, Education, Workforce, and Income Security Issues: 
United States Government Accountability Office:
441 G Street, N.W.: 
Washington, DC 20548:

Dear Ms. Bovbjerg:

We appreciate the opportunity to review your draft report entitled 
Private Pensions: Government Actions Could Improve the Timelines and 
Content of Form 5500 Pension Information. We believe the draft report 
fairly represents both the progress made and the remaining challenges 
of administering the Form 5500 process.

The Internal Revenue Service (IRS) is committed to working 
collaboratively with the Department of Labor (DOL), the Pension Benefit 
Guaranty Corporation (PBGC), and the Social Security Administration 
(SSA) to ensure that Form 5500 is processed in a timely manner and 
collects all relevant information.

The IRS, DOL, PBGC, and SSA have been working together to improve 
timeliness and reduce errors in Employee Retirement Income Security Act 
Filing Acceptance System (EFAST) processing. We support your 
recommendation that the Form 5500 be filed electronically. With 
electronic filing, EFAST can validate filings as received, reject 
filings with errors or incomplete responses, and minimize or eliminate 
error correction using electronic correspondence.

Similarly, we support your recommendations to improve EFAST to track 
more effectively plans from year to year and to modify Form 5500 as 
necessary to collect all relevant information, particularly with 
respect to multiemployer pension plans. We will continue to work with 
our partner agencies to improve all aspects of pension data collection 
and processing.

In closing, thank you for reviewing this critical process. If you have 
any questions please contact me or Steven T. Miller, Commissioner, Tax 
Exempt and Government Entities at (202) 283-2500.

Sincerely, 

Signed by: 

Mark W. Everson: 

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments:

Contacts:

Tamara Cross, Assistant Director (202) 512-4890; 
Raun Lazier, Analyst- in-Charge (202) 512-8386:

Staff Acknowledgments:

In addition to those named above, Joseph Applebaum, Richard Burkard, 
Scott Heacock, Gene Kuehneman, Michael Maslowski, Robert Parker, Roger 
J. Thomas, and Gail Vallierers made important contributions to this 
report.

FOOTNOTES

[1] For the purposes of this report, we will be discussing Form 5500 
Reports as they relate to private pension plans. 

[2] Some defined benefit plans are not covered by PBGC insurance; for 
example, plans sponsored by professional service employers, such as 
physicians and lawyers, with 25 or fewer employees. Some employers do 
not include all their employees in their defined benefit plans. 

[3] GAO, High Risk Series: An Update, GAO-05-207 (Washington, D.C.: 
January 2005).

[4] Throughout this report, the term "service providers" will be used 
to refer to those private sector entities that prepare Form 5500 
Reports on behalf of plan sponsors. 

[5] Defined benefit plans provide a guaranteed benefit generally 
expressed as a monthly benefit based on a formula that combines salary 
and years of service to the company. These plans express benefits as an 
annuity, but many offer departing participants the opportunity to 
receive lump sum distributions. Defined contribution plans establish 
individual accounts for employees to which employers, participants, or 
both make periodic contributions. In addition, defined contribution 
plan participants may be able to direct the investment of the assets in 
their accounts. 

[6] A plan administrator is the person specifically designated by the 
terms of the instrument under which the plan is operated. 

[7] A plan sponsor is defined as the employer, in the case of a single- 
employer plan, or employee organization in the case of a plan 
established or maintained by two or more employers or jointly by one or 
more employers or employee organizations. 

[8] Labor officials told us that under Title I of ERISA they have 
authority to require the electronic filing of their respective 
components of the Form 5500. PBGC officials said they have similar 
authority under Title IV of ERISA. IRS officials also said that under 
IRC they have authority to require the electronic filing of their 
respective components of the Form 5500. 

[9] These trusts, accounts, and other investment arrangements include 
master trust investment accounts (MTIAs), common or collective trusts 
(CCTs), pooled separate accounts (PSAs), and 103-12 investment entities 
(103-12 IEs).

[10] Labor regulations operationalize the deadline to the end of the 
seventh month after the close of the plan year (29 C.F.R. sec 2520.104a-
5).

[11] PBGC receives no funds from federal tax revenues, but it is 
authorized under ERISA to borrow up to $100 million from the federal 
treasury if it has inadequate resources to meet its responsibilities. 

[12] Although most of the Form 5500 information reported is made 
available, certain information, including that reported on Schedule E 
and Schedule SSA is not, as noted in table 1. 

[13] Small pension plans are also not generally required to file 
Schedule C, Schedule G, and the Accountant's Report. A small plan is 
generally a plan that has fewer than 100 participants. 

[14] An Enrolled Actuary is any individual who has satisfied the 
standards and qualifications as set forth in the regulations of the 
Joint Board for the Enrollment of Actuaries and who has been approved 
by the Joint Board to perform actuarial services required under ERISA.

[15] Corporate annual returns mentioned here refer to Securities and 
Exchange Commission (SEC) 10-K filings. The federal securities laws 
require certain publicly traded companies to disclose financial 
information on an ongoing basis. Domestic issuers (other than small 
business issuers) must submit such reports annually to the SEC on Form 
10-K.

[16] This extension is granted as long as the following three 
conditions are met: (1) the plan year and the employer's tax year are 
the same; (2) the employer has been granted an extension of time to 
file its federal income tax return to a later date than the normal due 
date for filing the Form 5500; and (3) a copy of the application for 
extension of time to file the federal income tax return is attached to 
the Form 5500.

[17] ERISA  103(a)(2).

[18] IRC  412(c)(10). 

[19] 26 C.F.R.  1.401(a)(4)-11(g)

[20] Most pension plans with 100 or more participants have an audit 
requirement for the Form 5500.

[21] EFAST uses optical character recognition (OCR) software and 2D bar 
code technology to capture data from paper Form 5500 filings. 

[22] Section 512 of ERISA provides for the establishment of an Advisory 
Council on Employee Welfare and Pension Benefit Plans. The council 
consists of 15 members appointed by the Secretary of Labor: three 
representatives of employee organizations (at least one of whom 
represents an organization whose members are participants in a 
multiemployer plan), three representatives of employers (at least one 
of whom represents employers maintaining or contributing to 
multiemployer plans); one representative each from the fields of 
insurance, corporate trust, actuarial counseling, investment 
counseling, investment management, and accounting; and three members of 
the general public.

[23] "Report of the Working Group on Electronic Reporting," ERISA 
Advisory Council, November 8, 2002. 

[24] "Report of the Working Group on Electronic Reporting," ERISA 
Advisory Council, November 8, 2002.

[25] For example, under the current deadlines for plan year 2001, a 
calendar year filer must file its Form 5500 by July 31, 2002. However, 
a non-calendar year plan, for example, that has a plan year that runs 
from October 1, 2001 to September 30, 2002, would have until April 30, 
2003 to file a Form 5500, or even longer if the filer receives 
available deadline extensions.

[26] Previous legislation includes the Paperwork Reduction Act of 1980 
(Pub. L. No. 96-511) and the Paperwork Reduction Reauthorization Act of 
1986 (Pub. L. No. 99-500). 

[27] A Notice of Proposed Forms Revisions soliciting public comments on 
proposed revision of the Form 5500 was published in the Federal 
Register on September 3, 1997 (62 Fed. Reg. 46556). 

[28] The three areas to strengthen retirement security for Americans in 
private defined benefit pension plans are (1) reforming the funding 
rules to ensure that employer fully fund their retirement promises, (2) 
reforming the PBGC premiums to better reflect the real risks and costs, 
and (3) increasing the disclosure of information about private defined 
benefit to workers, investors, and regulators. 

[29] The EIN is also used in a wide variety of employer tax filings. 

[30] A multiemployer plan is insolvent when its available resources are 
not sufficient to pay the level of benefits at PBGC's multiemployer 
guaranteed level. 

[31] One of Labor's objectives in requiring a plan to file a Form 5500 
report is to ensure that plan fiduciaries are monitoring the operations 
of the plan, including costs. This is consistent with the overarching 
fiduciary responsibility provisions of ERISA, which require plan 
fiduciaries to review and monitor fees for reasonableness on a periodic 
basis.

[32] Terminating an underfunded single-employer defined benefit plan is 
termed a distress termination if the plan sponsor requests the 
termination or an involuntary termination if PBGC initiates the 
termination. PBGC assumes responsibility for terminated underfunded 
plans and pays the pension obligations to plan participants up to the 
amount guaranteed under Title IV of ERISA. PBGC also makes a claim on 
the employer's assets in bankruptcy proceedings as an unsecured 
creditor. However, PBGC officials told us that the agency's claims 
usually amount to only a few cents per dollar claimed.

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