PRIVATE PENSIONS

Targeted Revisions 

Could Improve 

Usefulness of Form 

5500 Information

Report to the Ranking Member, 

Committee on Education and the 

Workforce, House of Representatives

June 2014

GAO-14-441

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-441, a report to the

Ranking Member, Committee on Education 

and the Workforce, House of Representatives

June 2014

PRIVATE PENSIONS

Targeted Revisions Could Improve Usefulness of 

Form 5500 Information

Why GAO Did This Study

The Form 5500 is the primary means 

of collecting information for use by the 

federal government and the private 

sector on retirement plan assets, which 

exceeded $6 trillion in fiscal year 2011. 

Stakeholders, including those who 

prepare and use the form, have raised 

concerns about the quality and 

usefulness of form data. GAO was 

asked to review Form 5500 plan 

investment and fee information.

In this report, GAO examined: (1) 

stakeholder problems with Form 5500 

plan investment information; (2) 

stakeholder problems with Form 5500 

service provider fee information, and 

(3) challenges DOL, IRS, and PBGC 

face in collecting and revising Form 

5500 information. GAO surveyed a 

panel of plan sponsors, service 

providers, representatives of plan 

participants, and researchers; 

interviewed agency officials; and 

reviewed studies on Form 5500 data.

What GAO Recommends

GAO recommends DOL, Treasury, and 

PBGC consider modifying Form 5500 

plan investment and service provider 

fee information to address challenges 

identified by our panel. DOL, Treasury, 

and PBGC should look for options to 

conduct advance testing when making 

major revisions to the form. Congress 

should consider granting Treasury 

authority to require Form 5500 data be 

filed electronically. PBGC agreed with 

the recommendations. DOL and 

Treasury did not state whether they 

agreed or disagreed with the 

recommendations; however, they 

identified actions underway to address 

the first recommendation. GAO 

continues to believe the 

recommendations are valid.

What GAO Found

In a two-phase online GAO survey, stakeholders identified problems with the 

usefulness, reliability, and comparability of data from the Form 5500 (see table). 

Despite longstanding concerns with the Form 5500—the annual report that 

employee benefit plans file with the federal government—agency officials have 

made only minimal changes over the last 3 years. 

Key Challenges Identified with Form 5500

Weaknesses 

in the format

Plan asset categories break out plan assets differently from the investment 

industry, and provide little insight into plan investments, their structure, or the 

level of associated risk. In particular, the majority of respondents indicated that 

the “other” plan asset category in the form is too broad because it can include 

many disparate types of investments. Respondents also indicated challenges in 

identifying the underlying holdings of plan assets invested in indirect investments. 

Challenges

in finding key 

information

The form lacks detailed information on plan investments because there is no 

structured, data-searchable format for attachments to the form and the filing 

requirements on plan investments is limited for small plans, which have less than 

100 participants. 

Inconsistent 

data

Naming conventions and identification numbers may be inconsistent, making it 

difficult to collect and accurately match records.

Source: GAO analysis of survey responses from our two-phase Form 5500 stakeholders panel. 

Stakeholders said the form’s information on service provider fees was misaligned 

with other required fee disclosures, and also cited various exceptions and gaps in 

current reporting requirements as major challenges. Specifically, Form 5500 

service provider fee information does not align with other information that service 

providers must disclose to plan sponsors, forcing providers to produce two 

different sets of information. Also, differences in service provider compensation 

types and the lack of definitions for codes designating the types of services 

provided can result in inconsistent and incomplete data being reported. Other 

exceptions and gaps in service provider information result in an incomplete 

picture of plan fees. For example, large plans—those with 100 or more 

participants—are not required to report fee information for certain types of 

compensation and small plans file only limited fee information.

The Department of Labor (DOL), the Internal Revenue Service (IRS), and the 

Pension Benefit Guaranty Corporation (PBGC) face significant administrative, 

statutory, and contractual challenges to collecting and revising the annual 

reporting information required for regulating private pensions. While the 

rulemaking process and other informal efforts to solicit stakeholder input have 

provided opportunities for public reaction to proposed changes to the form, these 

opportunities have been limited and have not included the advance testing OMB 

guidance suggests. Stakeholder input could lower costs by reducing subsequent 

changes, improve filer comprehension, and increase the comparability and 

reliability of the form’s data. Additionally, a statutory prohibition against requiring 

electronic filing caused IRS to remove certain data elements from the Form 5500 

after DOL mandated electronic filing of the form. If IRS were able to require 

electronic filing, it could add the data elements back to the form, which would 

improve its compliance, restore robust information to its enforcement activities, 

and decrease its data collection costs.

View GAO-14-441. For more information, 

contact Charlie Jeszeck at (202) 512-7215 or 

jeszeckc@gao.gov. 
Page i GAO-14-441 (Form 5500) 

Letter 1 

Background 4

Stakeholders Cited Challenges with Plan Asset Reporting Format, 

Missing Information, and Inconsistent Data 9

Stakeholders Cited Misalignment with Other Fee Disclosures and 

Inconsistent Reporting of Service Provider Fee Information as 

Problematic 20

DOL, IRS, and PBGC Face Administrative, Statutory, and 

Contractual Challenges to Collecting More Useful Form 5500 

Information 28

Conclusions 36

Recommendations for Executive Actions 37

Matter for Congressional Consideration 37

Agency Comments and Our Evaluation 38

Appendix I Objectives, Scope, and Methodology 41

Appendix II Selected Results for Suggested Changes to Plan Investment and

Service Provider Fee Information from the Phase 2 Survey of our

Two-phase Form 5500 Stakeholder Panel 48

Appendix III 2013 Form 5500 and Select Schedules 52

Appendix IV Comments from Department of Labor 66

Appendix V Comments from Department of Treasury/Internal Revenue Service 69

Appendix VI Comments from the Pension Benefit Guaranty Corporation 73

Appendix VII GAO Contact and Staff Acknowledgments 76

Contents
Page ii GAO-14-441 (Form 5500) 

Related GAO products 77

Tables

Table 1: Top Challenges with Form 5500 Plan Investment 

Information Identified by Survey Respondents 10

Table 2: Plan Assets in Indirect Investment Vehicles for Large 

Single-employer Plans (2010) 14

Table 3: Top Challenges with Form 5500 Service Provider Fee 

Information Identified by Survey Respondents 21

Table 4: Participation by Form 5500 Stakeholder Type Throughout 

Two-phase Online Panel Survey 44

Table 5: Key Questions from the Phase 1 Online Questionnaire 

from the Two-Phase Form 5500 Stakeholder Panel 45

Table 6: Top Changes with Form 5500 Plan Investment 

Information Suggested by Survey Respondents in our 

Two-Phase Survey Panel 48

Table 7: Top Service Provider Fee Changes Suggested by Survey 

Respondents in our Two-Phase Survey Panel 50

Figures

Figure 1: Complexity of Multi-layer Investment of Plan Assets, as 

Illustrated by a Hypothetical Example 16

Figure 2: Form 5500 Annual Return/Report of Employee Benefit 

Plan (2013) 52

Figure 3: Schedule C - Service Provider Information (2013) 54

Figure 4: Schedule H – Financial Information (2013) 60

Figure 5: Schedule I – Financial Information – Small Plan 64
Page iii GAO-14-441 (Form 5500) 

Abbreviations

103-12 IE 103-12 Investment Entity

APA Administrative Procedure Act

ASPPA American Society of Pension Professionals & Actuaries

CCT Common/Collective Trust 

CUSIP Committee on Uniform Securities Identification Procedures

DFE Direct Filing Entity

DOL Department of Labor

EBSA Employee Benefits Security Administration

EFAST ERISA Filing Acceptance System

EIN Employer Identification Number

ERISA Employee Retirement Income Security Act of 1974

FAQ frequently asked questions

Form 5500 Form 5500 Annual Return/Report of Employee 

Benefit Plan

IRC Internal Revenue Code

IRPAC Information Reporting Program Advisory Committee

IRS Internal Revenue Service 

MTIA Master Trust Investment Account

OMB Office of Management and Budget

PBGC Pension Benefit Guaranty Corporation

PN Plan Number

PRA Paperwork Reduction Act

PSA Pooled Separate Account

RIC Registered Investment Company

SSA Social Security Administration

TIGTA Treasury Inspector General for Tax Administration

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Page 1 GAO-14-441 (Form 5500) 

441 G St. N.W.

Washington, DC 20548

June 5, 2014

The Honorable George Miller

Ranking Member

Committee on Education and the Workforce

House of Representatives

Dear Mr. Miller:

Private sector pension plans in the United States represent trillions of 

dollars in assets and are a fundamental source of financial security for 

millions of Americans. To protect this key source of retirement security, 

the federal government needs information to ensure that plans are 

operated in accordance with certain prescribed standards and that 

sufficient information is provided to protect participant interests. The Form 

5500 Annual Return/Report of Employee Benefit Plan (Form 5500) is the 

primary source of information for both the federal government and the 

private sector regarding the funding, assets, investments, and fees of 

pension and other employee benefit plans.1 The Department of Labor 

(DOL), the Department of the Treasury’s Internal Revenue Service (IRS), 

and the Pension Benefit Guaranty Corporation (PBGC), jointly developed 

the form so plan sponsors could satisfy annual reporting requirements 

under the Employee Retirement Income Security Act of 1974 (ERISA) 

and the Internal Revenue Code (IRC) 2

 

1 For the purposes of this report, we will be discussing Form 5500 reports as they relate to 

private pension plans.

. The three agencies use the Form 

5500 to collect information for their various roles in regulating and 

monitoring private pension plans. Close to 700,000 plans filed a Form 

5500 in 2011, representing over $6 trillion in assets and more than 130 

2 Pub. L. No. 93-406, 88 Stat. 829 (codified as amended at 26 U.S.C. §§ 401-436 and 

4971-4982 and 29 U.S.C. §§ 1001-1453).
 

Page 2 GAO-14-441 (Form 5500) 

million participants and beneficiaries.3

Despite widespread use of and reliance on Form 5500 data, concerns 

have long been raised by stakeholders—especially those who prepare 

and use the form data—about the quality and usefulness of data it 

collects on plan investments and service provider fees. Data on those 

fees are crucial in assessing the financial risk, health, and cost of the 

plans, including service provider fee disclosures. Along with some 

researchers, we have expressed concerns that the form does not collect 

all of the information stakeholders need, including sufficient detail to fully 

understand plan investments, performance, and fees. We and the filing 

community have also found aspects of the form to be burdensome to 

complete and difficult to interpret. For example, in 2009, we found that 

plans were confused over DOL’s Schedule C reporting requirements and 

distinctions between compensation types (eligible indirect compensation 

vs. reportable indirect compensation).

Additional federal agencies and 

many private sector stakeholders use the plan investment and service 

provider fee information collected via the Form 5500 to assess plan 

benefits, fees, economic trends, public policy implications, and other 

issues. Although a large number of retirees rely on employer-sponsored 

plans, participants rarely review Form 5500 data themselves. Instead, 

participant advocates such as ERISA plaintiff’s attorneys and retirement 

counselors use the data to help protect participants’ interests. 

4

 

3 U.S. Department of Labor, Employee Benefits Security Administration, Private Pension 

Plan Bulletin, Abstract of 2011 Form 5500 Annual Reports, (June 2013). Participant types 

are active participants, retired or separated participants receiving benefits, and other 

retired or separated participants with a vested right to benefits. Beneficiaries include 

deceased participants whose beneficiaries are receiving or entitled to benefits. While 

some private sector employer-sponsored group health plans are required to file a Form 

5500, they are outside the scope of our report. Generally, a plan has 210 days from the 

end of the plan year to file its Form 5500, but filers may apply for an extension of an 

additional 21⁄2 months; therefore, 2011 was the most current data available.

GAO was asked to review the 

usefulness of plan investment and service provider fee information 

collected via Form 5500. Given these competing concerns, we examined 

(1) what aspects of the Form 5500 information on plan investments 

stakeholders find problematic; (2) what aspects of the Form 5500 

information on service provider fees stakeholders find problematic; and 

(3) what, if any, challenges DOL, IRS, and PBGC face in collecting and 

4 GAO, Private Pensions: Additional Changes Could Improve Employee Benefit Plan 

Financial Reporting, GAO-10-54, (Washington, D.C.: November 2009).
 

Page 3 GAO-14-441 (Form 5500) 

revising key annual reporting information on plan investments and service 

provider fees needed from plan sponsors.

To address these objectives, we interviewed knowledgeable agency 

officials and non-government Form 5500 stakeholders (representatives of 

plan sponsors, service providers, retirement consultants, attorneys, and 

researchers); reviewed industry publications along with relevant federal 

laws, regulations, and agency guidance, and inspected a 

nonrepresentative sample of 20 Form 5500 filings—10 defined 

contribution large plan filings and 10 defined benefit large plan filings—for 

the 2012 plan year.5

We conducted our work from November 2012 to June 2014 in 

accordance with generally accepted government auditing standards. 

These standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

To address the first and second research objectives, 

we gathered the opinions of pension professionals outside government 

who either work with Form 5500 or rely on it for their work by conducting 

a two-phase online panel survey of 43 non-government stakeholders. To 

ensure a range of views on our panel, we identified a non-representative 

sample of nongovernmental stakeholders from several backgrounds, 

including representatives of plan sponsors, participants, and services 

providers, as well as researchers and academics. We identified panelists 

from a variety of sources, including contacts developed in past related 

reports, participants in our 2011 and 2012 Comptroller General’s 

Retirement Security Advisory Panel sessions, Form 5500 users identified 

by DOL, and large pension and investment plan administrators and 

consultants.

 

5 We chose 2012 plan data because it was the most recent publicly available dataset 

where the majority of filings were filed at the time of our data analysis. Specifically, we 

limited our sample of plan fillings based on: 1) filings for plan year ending in calendar year 

2012, 2) filings for a defined benefit or defined contribution plan, 3) filings that included a 

Schedule C (Service Provider Information), H (Financial Information), and a Schedule of 

Assets Attachments, and 4) filings that have a non-zero value in the “Other” plan asset 

category in Schedule H. Based on these criteria, our potential sample of Form 5500s 

included 1,361 DB plans and 4,782 DC plans. See appendix I for more details on our 

sampling methodology. 
 

Page 4 GAO-14-441 (Form 5500) 

Private pension plans are governed by ERISA and the IRC, whose annual 

reporting requirements may generally be satisfied through filing a Form

5500 Annual Return/Report of Employee Benefit Plan (Form 5500) and its 

accompanying schedules.6 Any sponsor of an employee benefit plan 

subject to ERISA must file detailed information about each benefit plan 

every year. To satisfy the annual reporting requirements, DOL, IRS, and 

PBGC jointly developed and maintain the Form 5500. The form is the 

primary source of information collected by the federal government 

regarding the operation, funding, expenses, and investments of employee 

benefit plans.7 In 2011, plan sponsors filed close to 700,000 Form 5500 

reports, covering more than 130 million active participants and more than 

$6 trillion in investments.8 The Form 5500 Return includes nine schedules 

and attachments that collect information on particular plan aspects and 

fulfill specific filing requirements9

• plan investment and service provider fee information,

including:

• plan financial condition,

• annual participant contributions,

 

6 Certain pension and welfare plans with fewer than 100 participants at the beginning of 

the plan year may be eligible to file the Form 5500-SF, the Short Form Annual 

Return/Report of the Small Employee Benefit Plans, which is a simplified annual report 

form, instead of the Form 5500. Form 5500-SF filers generally are not required to file 

schedules or attachments, except for defined benefit pension plans, which must file the 

appropriate actuarial schedule. 

7 Most plan sponsors must submit some version of a Form 5500 each year for each plan 

they sponsor, but other reports are also sometimes required depending on the plan’s 

specific design and circumstances. For more details, see GAO, Private Pensions: Clarity 

of Required Reports and Disclosures Could Be Improved, GAO-14-92, (Washington, D.C.: 

November 2013).

8 Some plans maintain plan assets in certain trusts, accounts, and other investment 

arrangements that file their own Form 5500 annual return/report as a Direct Filing Entity 

(DFE). 

9 The schedules and attachments required to be filed for a plan varies based on plan type 

and plan size. For example, pension plans with less than 100 participants do not have to 

file Schedules C, G, or H. More information on the 2013 filing requirements of different 

types of plans is available in the Form 5500 instructions at www.dol.gov/ebsa/pdf/2013-

5500inst.pdf. 

Background

ERISA and Internal 

Revenue Code 

Requirements for

Form 5500
 

Page 5 GAO-14-441 (Form 5500) 

• certain investment income,

• plan type (i.e., defined benefit or defined contribution),

• funding methods, and

• number of participants.

For example, Schedule C requires plans to provide information on fees 

charged by select service providers. Schedules H and I require large and 

small plans respectively to provide information on plan investments. Plans 

are also required to include attachments, such as a Report of 

Independent Qualified Public Accountant. Form 5500 data are made 

publicly available. Given the form’s valuable information and its 

widespread use, we have conducted a number of reviews of it over the 

past few years, including examinations of the timeliness and content of 

the form, fee reporting, oversight of multiemployer plans, and the clarity of 

required disclosures.10

Form 5500 constitutes an integral part of the enforcement, research, and 

policy formulation programs of DOL, IRS, and PBGC—the primary federal 

agencies that use it to support their role in regulating and monitoring 

private plans. DOL’s Employee Benefits Security Administration (EBSA) 

uses the Form 5500 as a tool to monitor and enforce plan administrators 

and other fiduciaries and service providers’ responsibilities under Title I of 

ERISA. IRS uses the form to enforce 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 the minimum 

amount employers must contribute. PBGC uses the form as a tool to 

inform its efforts to insure the benefits of participants in most private 

sector defined benefit pension plans and help carry out its mission under 

Title IV of ERISA to encourage the continuation and maintenance of 

private pension plans. In March 2014, the DOL Office of Inspector 

General issued an audit report examining whether EBSA was effectively 

 

10 See GAO, Private Pensions: Government Actions Could Improve the Timeliness and 

Content of Form 5500 Pension Information, GAO-05-491, (Washington, D.C.: June 2005); 

GAO-10-54; GAO, 401(k) Plans: Increased Educational Outreach and Broader Oversight 

May Help Reduce Plan Fees, GAO-12-325, (Washington, D.C.: April 2012); GAO, Private 

Sector Pensions: Federal Agencies Should Collect Data and Coordinate Oversight of 

Multiple Employer Plans, GAO-12-665, (Washington, D.C.: September 2012); and GAO, 

Private Pensions: Clarity of Required Reports and Disclosures Could Be Improved, 

GAO-14-92, (Washington, D.C.: November 2013).

Federal Role and Other 

Form 5500 Stakeholders
 

Page 6 GAO-14-441 (Form 5500) 

overseeing the Form 5500 reporting process.11 Additionally, other federal 

agencies and Congress use information collected through the form to 

assess economic trends and develop policy initiatives. The Form 5500 is 

also a source of information and data for various nongovernmental 

stakeholders, who use it to assess employee benefit, tax, and economic 

trends and policies. Private plan sponsors are required to file annual 

reports concerning, among other things, the financial condition and 

operation of their plans. Form 5500 disclosure and reporting was intended 

to protect the interests of participants and their beneficiaries by, among 

other things, requiring disclosure and reporting to participants and 

beneficiaries of financial and other information.

In 1999, DOL, IRS, and PBGC implemented a new computerized system 

called the ERISA Filing Acceptance System (EFAST) to improve 

processing of Form 5500 returns. Because there was no electronic filing 

requirement when EFAST was implemented, most forms were submitted 

on paper. In January 2010, DOL completed its effort to begin collecting 

Form 5500 information electronically, an initiative known as ERISA Filing 

Acceptance System (EFAST2). DOL contracted with an information 

technology firm to design, develop, test, implement, operate, and 

maintain the EFAST2 system. While the form and its attachments are 

collected electronically, attachments are not all required to be in a single 

structured, data-searchable format. The move to EFAST2 and the 

implementation of an electronic filing requirement have addressed some 

long-standing issues with the timeliness of Form 5500 data, but additional 

timeliness concerns have not been addressed. Specifically, in a 2005 

report we raised concerns about the timeliness of Form 5500 information 

due to statutory reporting requirements that allow filers a substantial 

amount of time to file the Form 5500, which did not change with the 

implementation of EFAST2.12

DOL issued regulations revising the form in November 2007 in an effort to 

facilitate the transition to an electronic filing system; reduce and 

streamline annual reporting burdens; and update the annual reporting

forms to reflect current issues, agency priorities, and requirements of the 

 

11 Department of Labor, Office of Inspector General, Office of Audit, EBSA Could Improve 

Its Usage of Form 5500 Data, 05-14-003-12-121(Washington, D.C.: March 31, 2014).

12 GAO-05-491. 

Agency Initiatives
 

Page 7 GAO-14-441 (Form 5500) 

Pension Protection Act of 2006.13

DOL, IRS, and PBGC have established committees to work collectively 

on a number of initiatives related to the form. The tri-agency Form 5500 

working group, which consists of representatives from all three agencies, 

meets monthly to propose updates and discuss how to implement 

updates provided by each agency that should be made to the Form 5500. 

Proposed updates include minor technical changes, changes to the 

instructions, and changes that must be made as a result of statutory or 

regulatory changes. This working group facilitates discussion between the 

agencies, but according to DOL officials it is not a decision-making body. 

Each of the three agencies decides independently whether to proceed 

with changes to the form. Recently the three agencies established the 

21st Century Initiative to examine, among other things, the possibility of 

modernizing the form by making major, substantive revisions to all its 

parts. In addition, the initiative plans to examine the feasibility of 

streamlining the lengthy rulemaking process which generally requires 

DOL to take several steps, including obtaining review and clearance to 

publish by the Office of Management and Budget (OMB) and publishing a 

notice of proposed rulemaking in the Federal Register, providing 

interested persons the opportunity to comment on the proposed 

regulation, and publishing a final regulation. EBSA’s Office of Technology 

and Information Services is focused on, among other things, improving 

Among other things, these changes 

expanded the fee and compensation disclosures of the Form 5500. 

According to DOL officials, these changes were made to increase 

transparency regarding the fees and expenses employee benefit plans 

pay. DOL officials explained that they also wanted to ensure that plan 

officials would obtain the information needed to assess the compensation 

paid for services rendered to the plan while taking into consideration 

revenue-sharing arrangements among plan service providers and 

potential conflicts of interest. Since the 2009 plan year, Schedule C 

requires plan sponsors to classify the fees they pay service providers as 

either “direct” or “indirect” compensation. These fees are separated into 

those the plan pays directly to a service provider and those that service 

providers receive from third parties (such as another service provider) or 

plan investments.

 

13 Annual Reporting and Disclosure, 72 Fed. Reg. 64,710 (November 16, 2007). Codified 

at 29 C.F.R. pt. 2520.
 

Page 8 GAO-14-441 (Form 5500) 

the flexibility of the next EFAST system contract when the current 

contract expires in 2020.

In 2012, OMB issued a memorandum to provide guidance to agencies on 

testing and simplifying federal forms that collect information from the 

public.14 The memo further directed agencies to engage in advance 

testing of information collections— including lengthy and complex forms—

where feasible and appropriate, in order to: (1) ensure that they are not 

unnecessarily complex, burdensome, or confusing; (2) discover the likely 

burden on members of the public (including small businesses); and (3) 

identify ways to make the form as simple and easy to use as possible. 

The memorandum further advised that advance testing15 should occur 

either before proposing information collections to the public or during the 

public comment period required by the Paperwork Reduction Act of 1995 

(PRA), which sets forth the requirements that agencies must meet when 

collecting information.16

 

14 Office of Management and Budget, Office of Information and Regulatory Affairs, Testing 

and Simplifying Federal Forms, Memorandum for the Heads of Executive Departments 

and Agencies, and of the Independent Regulatory Commissions (Washington, D.C.: 

August 9, 2012).

15 Examples of advance testing can include focus groups, in-person observations of users’ 

perceptions of the forms and questions, web-based experiments, and randomized 

controlled experiments.

16See 44 U.S.C. § 3501 et seq. 
 

Page 9 GAO-14-441 (Form 5500) 

Form 5500 stakeholders identified challenges to the usefulness, reliability, 

and comparability of plan asset information. Through a two-phase online 

panel survey process, respondents17 first generated a wide range of 

challenges and potential changes related to Form 5500 plan investment 

information. Then, in the second phase of the survey, respondents rated 

those challenges and potential changes identified in first phase.18 The 

highest rated challenges fell into three categories: (1) challenges with the 

reporting format of plan asset categories, (2) challenges arising from 

missing key information, and (3) challenges with inconsistent information. 

Table 1 lists the top challenges respondents to the second phase of the 

survey rated as having a very or extremely significant impact to their work 

with the Form 5500.

 

17 While 32 panelists participated in second phase of our online survey, not all panelists 

provided a rating for each individual challenge or suggested change presented. 

Throughout the report, we refer to those panelists who provided a rating to an individual 

challenge or change suggestion as a respondent. For more information on our two-phase 

panel survey, see appendix I.

18 In the first phase of the panel survey, panelists were asked open-ended questions, to 

list specific challenges and suggest potential changes to improve the plan investment and 

service provider fee information on the form. We performed a content analysis on the 

responses to the open-ended questions to aggregate responses into lists of distinct 

challenges and suggested changes. In the second phase of the survey, we asked each 

panelist to rate the significance of the challenges and the impact of the suggested 

changes that the panel had collectively identified in the first phase. See appendix I for 

more information on the methodology of our two-phase panel survey. 

Stakeholders Cited 

Challenges with Plan 

Asset Reporting 

Format, Missing 

Information, and 

Inconsistent Data
 

Page 10 GAO-14-441 (Form 5500) 

Table 1: Top Challenges with Form 5500 Plan Investment Information Identified by Survey Respondents

Challenge 

category Potential challenge

Very 

significant

Extremely 

significant

Number of 

responses

Percent of 

responses 

very or 

extremely 

significant

Reporting 

format

“Other” plan asset category in Schedule H (Financial 

Information) line 1c-15 is too broad and may include 

different types of investments, such as swaps, hedge 

funds, private equity, etc.

12 5 31 54.8%

Many plans invest assets through Master Trust 

Investment Accounts (MTIA)a or Common/Collective 

Trusts (CCT)b

8 

; however, Schedule H, Part I allows 

plan sponsors to lump investments in all trusts all 

together. This does not provide transparency into the 

breakdown of investments held within each trust.

6 31 45.2%

Plan asset information collected in Schedule H, Part I 

asks plan sponsors to break out their plan assets quite 

differently from how the investment industry reports on 

this information

6 4 31 32.3%

Difficult to match up an individual plan’s investments 

and returns from the Direct Filing Entity (DFE)

8 c 2 31 32.3%

Missing key 

information

Cannot determine administrative expenses deducted 

from returns when a plan invests with a registered 

investment company

6 8 31 45.2%

No information on the default investment option in the 

plan

5 6 30 36.7%

No standard reporting format or unique identifier for 

funds listed in Schedule H line 4i – Schedule of Assets 

Attachments

4 7 31 35.5%

Schedule I (Financial Information—Small Plan) is 

lacking detailed information on plan assets

6 5 31 35.5%

No information on the breakdown of assets held by 

individual participant accounts within a plan

4 6 31 32.3%

Administrative expenses reported on Schedule H, Part 

II do not include certain indirect expenses

3 d 7 31 32.3%

Inconsistent 

information

Data provided on plan investments is not timely 7 5 31 38.7%

Inconsistent use of names and Employer Identification 

Numbers (EIN)e 8  

3 31 35.5%

Employer company stock and real property are often 

not recorded properly on Schedule H

6 5 31 35.5%

Confusion about including or excluding mutual funds 

on Schedule D (DFE/Participating Plan Information)

7 3 31 32.3%

Source: GAO analysis of survey responses from GAO’s two-phase Form 5500 stakeholders panel.

Note: Table shows plan investment challenges for which 10 or more panelists indicated it was a “very 

significant” or “extremely significant” 
 

Page 11 GAO-14-441 (Form 5500) 

a

For purposes of annual reporting, the instructions of the Form 5500 define a Master Trust Investment 

Account (MTIA) as a trust for which a regulated financial institution serves as trustee or custodian 

(regardless of whether such institution exercises discretionary authority or control with respect to the 

management of assets held in the trust), and in which assets of more than one plan sponsored by a 

single employer or by a group of employers under common control are held.

b

For purposes of annual reporting, the Form 5500 instructions define a Common/Collective Trust 

(CCT) as a trust maintained by a bank, trust company, or similar institution which is regulated, 

supervised, and subject to periodic examination by a state or federal agency for the collective 

investment and reinvestment of assets contributed thereto from employee benefit plans maintained 

by more than one employer or controlled group of corporations.

c

The Form 5500 instructions define a Direct Filing Entity (DFE) as any MTIA, CCT, Pooled Separate 

Account, 103-12 Investment Entity, or Group Insurance Arrangement who files a Form 5500 and for 

which all required attachments are filed in accordance with the DFE Filing Requirements. Some plans 

participate in certain trusts, accounts, and other investment arrangements that may file their own 

Form 5500. Plans that have plan assets in DFEs are eligible for certain annual reporting relief on their 

Form 5500 filings.

d According to DOL, reporting third party compensation on the Schedule H would be inconsistent with 

the balance sheet accounting principles of those portions of the schedule. 

e

IRS defines an Employer Identification Number (EIN) as a nine-digit number that IRS assigns to 

identify the tax accounts of employers and certain others who have no employees. For employee 

plans, an alpha (for example, P) or the plan number (e.g., 003) may follow the EIN. The IRS uses the 

number to identify taxpayers that are required to file various business tax returns. EINs are used by 

employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of 

decedents, government agencies, certain individuals, and other business entities.

Some Form 5500 stakeholders19 stated that the plan asset categories on 

Schedule H are not representative of current plan investments, which has 

several consequences.20

 

19In this report, we use the term “Form 5500 stakeholders” to refer to respondents of our 

two-phase online panel survey and other service providers, researchers, and 

representatives of plan participants we spoke to who did not participate in our panel 

survey.

Ten of 31 respondents noted that it’s a very or 

extremely significant challenge to break out plan assets on Schedule H 

differently than the investment industry typically reports this information. 

That makes it difficult to determine how to properly categorize 

investments based on the asset categories provided, according to a plan 

fiduciary. For example, large plans typically use an investment manager 

for each asset category (such as fixed income, equities, hedge funds, or 

private equity), but Schedule H’s plan asset categories are broken out by 

the type of investment vehicle (such as partnerships, collective trusts, 

pooled separate accounts, or mutual funds). Thus, it can be difficult to 

understand the categories, apply them, and disaggregate the data by 

investment vehicle rather than asset class. As one pension consultant 

20 Plan asset categories are reported on Part I of the Schedule H.

Challenges with Plan 

Asset Categories
 

Page 12 GAO-14-441 (Form 5500) 

said, the asset categories provide little insight into the investments 

themselves, the level of associated risk, or the structures of these 

investments. Furthermore, as one preparer pointed out, the trust reports 

and the audited financial statement do not match Form 5500 asset 

categories—forcing plan sponsors and their service providers to produce 

multiple sets of information. In addition, they often found inconsistencies, 

incomplete information, or miscategorized investments in the information 

service providers submitted.

A second consequence of misaligned plan asset categories, according to 

Form 5500 stakeholders, is that the “other” plan asset category is too 

broad. The “other” plan asset category may contain a variety of different 

types of disparate investments, such as options, index futures, state and 

municipal securities, hedge funds, and private equity. Seventeen of the 

31 respondents indicated that the “other plan asset” category is too broad 

and poses a very or extremely significant challenge to their work with 

Form 5500 data. One respondent said that while hedge fund and private 

equity have very different risk, return, and disclosure considerations from 

state and municipal securities, all these investments could be included in 

the “other plan asset” category. This is a growing issue as plan 

investment in some of these vehicles has grown considerably in recent 

years. As we found in 2012, according to a Pensions & Investments 

survey, the percentage of large plans (as measured by total plan assets) 

investing in hedge funds grew from 47 percent in 2007 to 60 percent in 

2010 and the percentage of large plans that invested in private equity 

grew from 80 percent to 92 percent.21

A third consequence of misaligned plan asset categories is that the 

current reporting format of plan investments makes it difficult to see the 

Similarly, several respondents said 

they have seen forms where large portions of plan assets were recorded 

in the “other” category.

 

21 GAO analysis of Pension & Investments annual survey data, 2001-2010. For the 

purposes of this analysis, large plans refer to plans with $1 billion or more in total assets. 

See GAO, Defined Benefit Plans: Recent Developments Highlight Challenges of Hedge 

Fund and Private Equity Investing, GAO-12-324 (Washington, D.C.: Feb. 16, 2012).
 

Page 13 GAO-14-441 (Form 5500) 

underlying holdings of indirect investments.22 According to a recent 

study23, large single-employer defined benefit plans invested about 64 

percent of their total assets, on average, in four types of indirect 

investments in 2010 (see table 2). Thus, a majority of the assets of large 

single-employer defined benefit plans are reported only as 

“undifferentiated indirect investments” on Schedule H.24 Similarly, large 

single-employer defined contribution plans in 2010 held about 34 percent 

of their total assets, on average, in indirect investments (see table 2). 

Almost half of our survey respondents indicated that Schedule H’s lack of 

transparency into the breakdown of investments held within each trust 

was a very or extremely significant challenge. Eight out of 11 researchers 

and 5 of 6 participant representatives from our survey panel indicated this 

was a very or extremely significant challenge.25 One ERISA attorney we 

spoke to noted that he needed to hire a consulting actuary to provide 

clarity of one plan’s financial investments. Without clear information on 

these indirect investment vehicles, it is more difficult for Form 5500 

stakeholders to assess and analyze the risk of underlying investments of 

plans using Form 5500 data. For example, PBGC officials acknowledged 

that plan asset information as currently reported is not very useful to their 

work and that they have to ask plans for additional information, such as 

actuarial reports and audited financial statements, to help identify the 

underlying assets in indirect investments to assess the financial health of 

the plan.

 

22 For the purposes of this report, indirect investments refers to plan investment in any 

number of pooled investment vehicles that are not registered investment companies and 

may file their own Form 5500s as a Direct Filing Entity (DFE). DFEs include Master Trust 

Investment Accounts (MTIA), Common/Collective Trusts (CCT), Pooled Separate 

Accounts (PSA), and 103-12 Investment Entities (103-12 IE), which are pooled investment 

entities that include plan assets from more than one employee benefit plan, that are not 

MTIAs, CCTs, or PSAs. Real estate investment funds, hedge funds, and private equity 

funds may be categorized as a 103-12 IE.

23 Peter J. Wiedenbeck, Rachel K. Hinkle, and Andrew D. Martin, “Invisible Pension 

Investments,” Virginia Tax Review, vol. 32, no.4 (2013). 

24 Plan sponsors are required to break out the underlying assets in CCTs and PSAs into 

the appropriate plan asset categories on Schedule H if the entity does not file its own 

Form 5500. 

25 Only 1 out of 15 representatives of plan sponsors and their service providers indicated 

Schedule H’s lack of transparency into the breakdown of investments held within each 

trust was a very or extremely significant challenge. 
 

Page 14 GAO-14-441 (Form 5500) 

Table 2: Plan Assets in Indirect Investment Vehicles for Large Single-employer Plans (2010)

Indirect Investment Vehicle

Percent of large defined

benefit plan total assets a Percent of large definedcontribution plan total assets 

Master Trust Investment Account (MTIA) 49.4% 20.4%

Common/Collective Trust (CCT) 11.7% 9.9%

103-12 Investment Entities (103-12 IE) 1.8% —- 

Pooled Separate Accounts (PSA) 1.4% 3.5%

Total 64.3% 33.8%

Source: GAO analysis of data from Wiedenbeck, Hinkle, and Martin, “Invisible Pension Investments,” 591.

Note: Large plans refer to plans covering 100 or more participants at the start of the plan year, 

annually filing Form 5500 Schedule H.

a

For the purposes of this report, indirect investments refers to plan investment in any number of 

pooled investment vehicles that are not registered investment companies and may file their own Form 

5500s as a Direct Filing Entity. Direct Filing Entities include Master Trust Investment Accounts 

(MTIA), Common/Collective Trusts (CCT), Pooled Separate Accounts (PSA), and 103-12 Investment 

Entities (103-12 IE), which are pooled investment entities that include plan assets from more than one 

employee benefit plan, that are not MTIAs, CCTs, or PSAs. Real estate investment funds, hedge 

funds, and private equity funds may be categorized as a 103-12 IE.

The ability to see into the underlying holdings of indirect investments is 

further complicated by the difficulty in matching a plan’s investments and 

returns with those reported in the indirect investment’s filing.26 Seven of 

11 researchers and 3 of 6 participant representatives from our panel cited 

difficulty in matching up an individual plan’s investment and returns from 

indirect investments as a very or extremely significant challenge.27

 

26 Some plans participate in certain trusts, accounts, and other indirect investment 

arrangements, such as an MTIA, CCT, PSA, 103-12 Investment Entity, or Group 

Insurance Arrangement. Plans that have plan assets in these indirect investments that file 

their own Form 5500s are eligible for certain annual reporting relief on their Form 5500 

filings regarding their interests in these indirect investments.

When 

plan assets are invested in indirect investments, plan sponsors file a 

Schedule D, which lists the plan’s interests in each indirect investment; 

the indirect investment’s filing then provides a breakdown of assets in its 

own Schedule H (see figs.1 and 2). Although indirect investments are 

required to file their own Form 5500, they report on their general asset 

holdings, not the holdings of individual plans invested with them. 

According to one respondent, there is no way to calculate the fees 

27 None of 15 representatives plan sponsors and service providers indicated difficulty in 

matching up an individual plan’s investment and returns from indirect investments as a 

very or extremely significant challenge.
 

Page 15 GAO-14-441 (Form 5500) 

charged to individual plans. Furthermore, the information reported on 

Schedule D may not be reliable or complete and may not match the 

information in the indirect investment’s filing. According to a recent study 

of 2008 plan year Form 5500 data, more than 35 percent of plans that 

invested in indirect investments reported data on their Schedules H and D 

that were inconsistent.28

 

28 Wiedenbeck, Hinkle, and Martin, “Invisible Pension Investments,” 591.

In addition to internal inconsistencies, the study 

showed that matching a plan’s indirect investments with the indirect 

investment’s own filing can be challenging since 18 percent of reported 

plan investments could not be matched to a corresponding indirect 

investment filing. Furthermore, there may be multiple layers of indirect 

investment entities that complicate efforts to identify the underlying 

investments individual plans held because it required linking multiple 

indirect investment filings to a single plan filing (see fig. 1).
 

Page 16 GAO-14-441 (Form 5500) 

Figure 1: Complexity of Multi-layer Investment of Plan Assets, as Illustrated by a Hypothetical Example

Note: The figure represents a simplified illustration of hypothetical Plan A’s investment of plan assets. 

The figure also shows the interests of other potential investors in these hypothetical pooled 

investment vehicles and the reporting requirements for a large plan sponsor and its indirect 
 

Page 17 GAO-14-441 (Form 5500) 

investments. The composition of plan assets, the structure of the vehicles holding plan assets, and 

the degree to which plan assets are held in pooled investment vehicles will vary from plan to plan. 

The top rated change to plan investment information suggested by 

respondents was to revise Schedule H asset categories to better match 

current investment vehicles (see appendix II). Consistent with the results 

of our survey panel, DOL, IRS, and PBGC officials all concurred that plan 

asset categories do not reflect investments in the current marketplace 

and should be revised.

In addition to challenges with the reporting format, Form 5500 

stakeholders identified various instances where information is not 

collected or easily extracted from Form 5500 data. For example, 11 of 31 

respondents indicated that having no standard reporting format for the 

Schedule of Assets Attachments (Schedule H line 4i) was a very or 

extremely significant challenge. Attachments to the form can be large—

some may be as long as 400 pages—presenting a challenge for users to 

find necessary information. Also, it can be difficult to conduct aggregate 

analyses of the information without a unique identifier, such as a 

Committee on Uniform Securities Identification Procedures (CUSIP) 

number, as one respondent suggested.29 Our survey results showed that 

while most researchers indicated that a lack of a standard reporting 

format or unique identifier for plan assets attachment is a major 

challenge, representatives of plan sponsors and service providers and 

participant representatives did not.30

 

29 A CUSIP number identifies most securities, including stocks of all registered U.S. and 

Canadian companies, and U.S. government and municipal bonds. The number uniquely 

identifies a company or issuer and the type of security. 

However, 22 of 31 respondents 

indicated that standardizing the format would be a somewhat positive or 

very positive change and only 3 respondents indicated this change would 

have a negative impact. Both DOL and PBGC officials said there is no 

uniform format or uniform identifier to the Schedule of Assets 

Attachments; however, they acknowledged that attachments would be 

more useful if they were submitted in a structured, data-searchable 

format.

30 Eight of 11 researchers, 2 of 15 plan sponsor and service provider representatives, and 

1 of 6 plan participant representatives indicated that a lack of a standard reporting format 

or unique identifier for plan assets attachment is a very or extremely significant challenge.

Challenges with Finding 

Key Information
 

Page 18 GAO-14-441 (Form 5500) 

Respondents also identified additional plan investment information that 

would be beneficial to add to the Form 5500. First, some respondents—

mainly researchers and participant representatives—indicated that a lack 

of detailed plan asset information on Schedule I (Financial InformationSmall Plan) creates a very or extremely significant challenge for their 

work with the Form 5500.31 In addition, the Schedule H (Financial 

Information) is required only with larger plans (plans with 100 or more 

participants)—which account for approximately 12.5 percent of all plans 

that filed a form in 2011—leaving the vast majority of plan filings without 

this critical information. According to one respondent, without the 

Schedule H, it is not possible to build a complete picture of a plan’s 

health. Schedule H and the accompanying attachments can help 

determine if a plan provides a variety of investment options, can help 

calculate the total cost of the plan for participants, and provide a more 

complete understanding of plan investments. However, another 

respondent cautioned against treating small employers like large 

employers and burdening them with additional filing requirements to 

satisfy researchers or commercial data mining firms. Second, although 

the form requires plan sponsors to indicate if a plan includes an auto 

enrollment feature through the plan characteristic codes, it does not 

capture which default investment is used.32 Although 11 of 30 

respondents indicated that not knowing the default investment is a very or 

extremely significant challenge, it was a top-rated suggested change, with 

only one respondent citing it would have a negative impact. For a list of all 

the top changes rated by our survey respondents, see appendix II.

 

31 Seven of 11 researchers, 3 of 6 plan participant representatives, and 1 of 15 plan 

sponsor representatives indicated that Schedule I lacking detailed plan asset information 

is a very or extremely significant challenge.

32 A default investment is a vehicle in which employee contributions will be invested 

absent a specific choice by the plan participant. PPA included various provisions designed 

to encourage greater retirement savings among workers eligible to participate in 401(k) 

plans, such as provisions that facilitate plan sponsors’ adoption of automatic enrollment 

policies. See Pub. L. No. 109-280, § 902, 120 Stat. 780, 1033.
 

Page 19 GAO-14-441 (Form 5500) 

Form 5500 stakeholders also cited challenges with understanding 

instructions and interpreting inconsistently reported data. Eleven of 31 

respondents indicated that inconsistent naming conventions and 

Employer Identification Numbers (EIN) throughout the form presented a 

very or extremely significant challenge.33

Some respondents still find the timeliness of Form 5500 to be problematic 

(see table 1). According to one independent fiduciary, current plan assets 

are usually quite different from the assets listed in the Form 5500. PBGC 

officials expressed frustration with Form 5500 reporting deadlines as well. 

One plan preparer said that 

compiling and recording EINs and Plan Numbers (PN) for each entity 

recorded on Schedule D can be difficult and time-consuming because 

plan sponsors, trustees, or service providers do not always provide this 

information. In addition, one researcher stated that plans often report the 

wrong number for indirect investments, which hinders the ability to link the 

indirect investment’s filing with the plan’s filing and prevents accurate 

attribution of indirect investments. Thirteen of 31 respondents indicated 

that providing a central repository of EINs and PNs would be a very 

positive change. PBGC officials also acknowledged that inconsistent EINs 

and PNs can hinder their ability to analyze records across years. While 

IRS officials said they have a repository of EINs and assign EINs to filers, 

they do not share the EINs with the other agencies or make this 

information publicly available to filers. DOL has taken some steps to 

improve the reliability of PNs, EINs, and names that filers reported. For 

example, EFAST2 enables filers to identify previously used names and 

EINs and form instructions state filers should use the same name and PN 

as in previous years. In addition, DOL examines plans that stop filing 

Form 5500s as part of its enforcement activities, and often finds that 

plans have continued filing, but with inconsistent identification. According 

to DOL, in an effort to improve filer consistency in entering key identifying 

information, such as the EIN, PN and Plan Name, DOL’s EFAST program 

office is developing specifications for cross-year edit checks. These 

checks aim to verify identifying information submitted on the Form 5500 in 

order to notify the filer and government agencies of instances where 

inconsistencies may exist. IRS works with filers to file amended returns to 

update and correct EINs when they become aware of an issue, according 

to IRS officials. 

 

33 An EIN is s a unique nine-digit number assigned by the IRS to business entities for the 

purposes of identification.

Challenges with

Identifying Plans 

and Funds

Consistently and

Other Issues
 

Page 20 GAO-14-441 (Form 5500) 

The EFAST2 system has reduced the time it takes to publish Form 5500 

data to the public once it is submitted. Under ERISA, however, 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 

1⁄2 month extension. Thus, plan sponsors can take up to 285 days from 

the end of the plan year to file their Form 5500 reports.

In addition to the challenges and suggested changes mentioned above, 

respondents identified a number of other changes to Form 5500 

investment information that could have a positive impact, such as 

clarifying:

• when to use fair value versus contract value on the Schedules H and 

I, and

• if a “contract administrator” referred to in Schedule H includes record 

keepers.

For a complete list of suggested changes identified by respondents 

through our two-phase online panel survey, see appendix II.

Stakeholders identified a wide range of challenges related to Form 5500 

service provider fee information. Representatives of plan sponsors and 

their service providers cited the burden of being required to produce 

different sets of fee information—one for ERISA fee disclosures and one 

for the Form 5500. Participant representatives found the format confusing 

to understand and ineffective for estimating total plan costs. Researchers 

found the current Schedule C reporting format unhelpful because it 

provides an incomplete picture of plan fees and aggregate data are not 

very reliable or comparable. Table 3 lists the top challenges respondents 

of our two-phase online panel survey identified as having a very 

significant or extremely significant impact to their work with the Form 

5500.

Stakeholders 

Cited Misalignment 

with Other Fee 

Disclosures and 

Inconsistent 

Reporting of Service 

Provider Fee 

Information as 

Problematic
 

Page 21 GAO-14-441 (Form 5500) 

Table 3: Top Challenges with Form 5500 Service Provider Fee Information Identified by Survey Respondents

Potential challenge

Very 

significant

Extremely 

significant

Number of 

responses

Percent of 

responses very 

or extremely 

significant

Service provider fee information provided to form preparers is 

inconsistent because of different reporting formats

13 4 31 54.8%

Schedule C (Service Provider Information) does not align with 

408(b)(2) fee disclosure requirements

10 a 6 30 53.3%

Compensation paid to the service provider by the plan sponsor 

does not have to be disclosed

4 10 30 46.7%

Definitions of eligible indirect, reportable indirect, and direct 

compensation are unclear

6 8 31 45.2%

The revenue sharing arrangement information can be provided 

in descriptive format and may vary significantly across 

providers

5 9 31 45.2%

Confusion and inconsistent reporting of service provider codes 

in Schedule C

8 5 31 41.9%

Rules on soft dollar disclosureb are confusing 4 6 31 32.3%

Inconsistencies in reporting period for fees (accrued fees 

versus fees paid in given year)

9 1 31 32.3%

Hard for Form 5500c preparers to determine if a fund/fee 8 

should be treated as eligible indirect compensation because 

notice is not required to be sent to plan administrator

2 31 32.3%

Source: GAO analysis of survey responses from GAO’s two-phase Form 5500 stakeholders panel.

Note: Table shows service provider fee challenges for which 10 or more panelists indicated it was a 

“very significant” or “extremely significant”

a

Certain service providers are required to disclose fee information to plan fiduciaries of defined benefit 

and defined contribution pension plans to satisfy disclosure requirements under Title I of ERISA. See 

29 U.S.C. § 1108(b)(2) and 29 C.F.R. § 2550.408b-2.

b

According to the 2012 Form 5500 instructions, “Soft dollar” compensation refers to research or other 

products or services received from a broker-dealer or other third party in connection with securities 

transactions.

c

Form 5500 is the annual report that employee benefit plans file with the federal government.

More than half of respondents indicated that Schedule C reporting 

misalignment with similar service provider fee disclosures required by 

ERISA—such as ERISA 408(b)(2) disclosures—as an extremely or very 

significant challenge34

 

34 See 29 U.S.C. § 1108(b)(2) and 29 C.F.R. § 2550.408b-2.

(see table 3). As we reported in 2009, this 

Form 5500 Service 

Provider Information Is Not 

Aligned with Other Plan 

Fee Disclosures
 

Page 22 GAO-14-441 (Form 5500) 

misalignment creates competing sets of fee information for sponsors and 

service providers, contributes to confusion over what Schedule C 

requires, is time-consuming for plan sponsors to collect, and is costly for 

service providers to prepare.35

The majority of survey respondents indicated that coordinating service 

provider compensation information on Schedule C with ERISA fee 

disclosure requirements would be a very positive change and only one 

respondent indicated this would be a very negative change (see appendix 

II). In 2009, we recommended that DOL coordinate revisions to the form 

with the publication of its final 408(b)(2) regulations to reduce the 

potential for additional costs and burden on service providers.

One respondent noted that the confusion 

partly stems from the inconsistent definitions of indirect compensation—

fees plans pay “indirectly” to service providers—for ERISA fee disclosures 

and Schedule C. Another respondent cited confusion among fund 

managers and plan recordkeepers over the ability for ERISA fee 

disclosures to satisfy the disclosure requirements for eligible indirect 

compensation, as defined in Schedule C.

36 Although 

DOL agreed with our recommendation, the agency has not yet taken 

action to fully implement it.37, 38

 

35 GAO, Private Pensions: Additional Changes Could Improve Employee Benefit Plan 

Financial Reporting, 

DOL officials agreed that there is an 

ongoing need to better align Form 5500 service provider fee disclosures 

GAO-10-54 (Washington, D.C.: November 5, 2009).

36 GAO-10-54, 21.

37 DOL issued final 408(b)(2) regulations in 2012, but these regulations did not fully 

address our recommendation because no changes were made to harmonize the final 

408(b)(2) service provider disclosures with Form 5500 schedule C service provider 

reporting requirements. See Reasonable Contract or Arrangement Under Section 

408(b)(2) – Fee Disclosure, 77 Fed. Reg. 5632 (February 3, 2012)(codified at 29 C.F.R. 

pt. 2550) and Amendment Relating to Reasonable Contract or Arrangement Under 

Section 408(b)(2) – Fee Disclosure/Web Page, 77 Fed. Reg. 41,678 (July 16, 

2012)(codified at 29 C.F.R. pt. 2550).

38 In March 2014, DOL announced its intention to conduct focus groups to evaluate the 

effectiveness of 408(b)(2) fee disclosures. Proposed Information Collection Request 

Submitted for Public Comment; Evaluating the Effectiveness of the 408(b)(2) Disclosure 

Requirements, 79 Fed. Reg. 14,085 (March 12, 2014). This effort is being undertaken in 

connection with new amendments to the 408(b)(2) regulation DOL is also proposing. 

Amendment Relating to Reasonable Contract or Arrangement Under Section 408(b)(2) – 

Fee Disclosure, 79 Fed. Reg. 13,949 (March 12, 2014)(to be codified at 29 C.F.R. pt. 

2550).
 

Page 23 GAO-14-441 (Form 5500) 

to plan sponsors and said they are considering addressing this issue as 

part of a joint DOL, IRS, and PBGC initiative to revise the form.

Stakeholders identified various challenges to consistently reporting 

information on service provider compensation. Without consistent 

information, comparability across plans is limited and, therefore, 

identifying questionable fees may be difficult. Fourteen of 31 respondents 

indicated that unclear definitions of eligible indirect compensation, 

reportable indirect compensation, and direct compensation created a very 

or extremely significant challenge. According to a 2013 letter from the 

American Society of Pension Professionals & Actuaries (ASPPA) 

submitted to DOL, ASPPA members noted that there have been 

conflicting interpretations of the instructions for Schedule C. For example, 

one disclosure might reflect certain compensation and expenses of a 

mutual fund as reportable on one line of Schedule C, while another 

disclosure for the same type of payments might be reportable on a 

different line of Schedule C. This uncertainty results in the same types of 

information being reported inconsistently, as most preparers are not 

inclined to challenge where the disclosure should appear and, therefore, 

preparers typically report the information as it is provided to them. While 

this satisfies the plan’s disclosure obligations, it produces incomparable 

and less reliable data. Adding to inconsistencies in fee reporting is 

continuing confusion with the rules on soft dollar disclosure.39

Stakeholders also identified challenges with collecting compensation 

information from service providers. Eleven of 15 representatives of plan 

sponsors and their service providers responding to our survey indicated 

that receiving service provider fee information in differing formats is 

Ten 

respondents indicated confusion about the rules on soft dollar disclosure 

was a very or extremely significant challenge. DOL officials said that it 

published frequently asked questions (FAQ) in 2009 and 2010 

respectively, which included clarification on the reporting of soft dollar 

compensation, but some respondents indicated confusion and 

inconsistencies still exist.

 

39 According to the 2012 Form 5500 instructions, “soft dollar” compensation refers to 

research or other products or services received from a broker-dealer or other third party in 

connection with securities transactions.

Challenges with 

Inconsistent Reporting of 

Compensation Types
 

Page 24 GAO-14-441 (Form 5500) 

extremely or very challenging.40 According to one preparer, the onus is on 

the plan sponsor and their preparers to collect the necessary information 

on Schedule C, since there is no requirement for service providers to 

report compensation information in a format similar to Schedule C.

41

However, service providers may or may not interpret certain 

compensation as reportable, leaving DOL with incomplete and 

incomparable information. For example, service providers may not list 

certain breakdowns of compensation information in a format that is similar 

to the Form 5500. In addition, some forms of compensation are not 

included in information sent to plan preparers. One preparer said they 

may look at trust reports or public disclosures to try to determine 

compensation amounts, but compensation may not be reported in the 

format required for Schedule C and may not include all forms of indirect 

compensation. Furthermore, for indirect compensation to be considered 

“eligible” and thus reported on the Schedule C in a more limited fashion, 

the plan sponsor or plan administrator must receive written materials from 

the service provider. There is no requirement to send these materials to 

the plan preparer, so they often cannot independently verify disclosure 

requirements have been met.42 Ten of 31 survey respondents indicated 

that this was a very or extremely significant challenge. Further, in 2010, 

the Investment Company Institute stated in a letter to DOL that there is a 

lack of consensus within the mutual fund industry regarding disclosure 

requirements for documents provided to plan sponsors that would also 

fulfill eligible indirect compensation disclosure for Schedule C.

 

40 Four of 11 researchers and 2 of 6 plan participant representatives indicated that 

receiving service provider fee information in differing formats is extremely or very 

challenging.

41 Covered service providers must disclose compensation and other information related to 

their service arrangements upon the request of the plan fiduciary or plan administrator of 

defined benefit or defined contribution plan; however, the format and the information 

disclosed follows ERISA 408(b)(2) requirements, which differs from Schedule C reporting 

requirements. See 29 C.F.R. § 2550.408b-2.

42 For indirect compensation to be considered eligible, the plan sponsor must receive 

written materials from the service provider that include: 1) the existence of indirect 

compensation, 2) services provided for this compensation, 3) formulas used to calculate 

the value of this compensation, 4) who received the compensation, and 5) who paid the 

compensation.
 

Page 25 GAO-14-441 (Form 5500) 

Stakeholders also identified issues with the completeness of service 

provider and fee information. For example, plan sponsors must report the 

name, address, and the EIN of the service provider for eligible indirect

compensation, but not the compensation amounts or services provided 

on Schedule C. Compensation categorized as eligible can encompass 

many services and a significant portion of compensation that plans and 

participants pay.43

• stable value contracts

In addition, service providers may also choose to 

disclose only the formulas they use to determine reportable indirect 

compensation, making it difficult for sponsors to calculate fees or 

understand business arrangements. For example, information on revenue 

sharing arrangements can be provided in descriptive format and reporting 

may vary significantly from provider to provider. Fourteen respondents 

indicated that this was a very or extremely significant challenge. Plans 

with fewer than 100 participants are not required to complete a Schedule 

C (Service Provider Information). Furthermore, one respondent pointed 

out several other exceptions in the Schedule C reporting requirements 

that apply to large plans that have more than 100 participants. These 

include:

44

• service providers paid less than $5,000 do not have to be listed,

(filers are not required to report certain 

insurance company costs and expenses),

• compensation reported on Schedule A, and

• group annuity contracts45

 

43 Types of indirect compensation that may be reported as eligible indirect compensation 

include fees or expense reimbursement payments charged to investment funds, finder’s 

fees, “soft dollar” revenue, brokerage commissions or other transaction-based fees that 

were not paid directly by the plan or plan sponsor.

and some associated fees may not be 

recorded.

44 A stable value contract is an insurance company general account investment that 

promises a guaranteed rate of return and takes into account various factors, including 

insurance company costs and expenses, in establishing the guaranteed crediting rate. 

DOL has said that such insurance company costs and expenses do not involve the insurer 

receiving reportable compensation for providing services, such as investment 

management services, for an investment fund portfolio in which the plan invests.

Challenges with 

Completeness of Service 

Provider Fee Information
 

Page 26 GAO-14-441 (Form 5500) 

Given these various exceptions to fee reporting requirements, Schedule 

C may not provide participants, the government, or the public with 

information about a significant portion of plan expenses and limits the 

ability to identify fees that may be questionable.

Most stakeholders indicated that DOL should clarify Schedule C 

instructions so that plan fees are reported more consistently. Popular 

suggestions on how to achieve this included:

• improving instructions for direct, eligible indirect, and reportable 

indirect compensation (19 of 31 respondents said this would have a 

very positive impact),

• improving consistency between DOL’s definition of direct 

compensation and generally accepted accounting principles (14 of 31 

respondents said this would have a very positive impact), and

• eliminating any distinction between eligible and reportable indirect 

compensation (13 of 30 respondents said this would have a very 

positive impact).

See appendix II for a complete list of these and other top suggested 

changes related to fees based on responses from our two-phase online 

panel survey.

DOL officials said that the definition of indirect compensation was 

intentionally broad to ensure comprehensive reporting of hidden service 

provider fees. However, they agreed that further clarification of fee 

reporting is being considered as part of a joint DOL, IRS, and PBGC 

initiative to revise the form. In 2009, we recommended that asset-based 

fees should be explicitly reported.46

 

45 A group annuity contract is an annuity contract entered into by the owner for the benefit 

of a designated group, such as plan participants. Insurance companies frequently offer a 

range of investment alternatives for individual account plans through a group variable 

annuity contract between an insurance company and an employer on behalf of a plan. 

Variable annuities include one or more insurance elements, which are not present in other 

investment alternatives. Generally, these elements include an annuity feature, interest and 

expense guarantees, and any death benefit provided during the term of the contract. The 

variable annuity contract “wraps” around investment alternatives, often a number of 

mutual funds. In addition to investment management fees and administration fees, these 

contracts may also contain sales expenses, mortality risk charges, and the cost of issuing 

and administering contracts, as well as surrender and transfer charges. 

We also recommended that DOL 

provide additional guidance regarding the reporting of indirect 

46 GAO-10-54, 20.
 

Page 27 GAO-14-441 (Form 5500) 

compensation and require that all indirect compensation be disclosed. 

DOL generally agreed with our recommendations; however, these 

recommendations remain open.

Stakeholders also identified inconsistent reporting of service codes used 

to describe the types of services provided and compensation received by 

service providers as a challenge. Thirteen of 31 survey respondents 

indicated inconsistent reporting of service codes on Schedule C was a 

very or extremely significant challenge. Without definitions for each 

service code, the filing community may interpret these codes differently, 

creating incomparable information across filings. Preparers must select 

from 55 service codes, and one respondent said that several service 

codes appear to overlap making it difficult to understand the differences 

between service codes without more guidance. Plan sponsors and their 

preparers primarily rely on the service codes that service providers 

submit, and sometimes service providers report only one code regardless 

of the number of services they provide. Other service providers break out 

compensation by service codes, creating a record in Schedule C for each 

service code instead of including several service codes in one entry which 

can result in double-counting. One preparer said they may look at the 

service provider contracts to determine what services were provided and 

what corresponding service codes to include, but the contracts do not 

always reflect all the services provided or provide compensation amounts 

attached to those services. Thirteen of 29 respondents indicated that 

reducing and simplifying the number of service codes and adding 

definitions would be a very positive change. Recently, ASPPA offered an 

example of simplified service codes that could be a model to agency 

officials.47 

 

47 See ASSPA’s website (http://www.asppa.org/Resources/Comment-Letters). 

Challenges with

Service Codes
 

Page 28 GAO-14-441 (Form 5500) 

DOL, IRS, and PBGC stated that the process for making form changes is 

lengthy and involved, and also noted that it varies by agency. DOL 

officials noted their view that any material changes to the Form 5500 

require the use of the informal rulemaking process under the 

Administrative Procedure Act (APA), which they said can be a time and 

resource intensive process.48 IRS and PBGC on the other hand view the 

form as a data collection instrument and handle changes to the form in 

compliance with the Paperwork Reduction Act (PRA). Regardless of 

whether any changes are made to the form, under PRA, each agency is 

required to solicit public comments on proposed collections of 

information, such as Form 5500, every 3 years.49

 

48 According to DOL officials, streamlining the rulemaking process to make it more flexible 

and timely is something they will seek to address as part of their 21st Century Initiative. 

However, officials from 

each agency noted that the comments they receive through the PRA 

process are generally limited because the notice is focused on reducing 

respondent burden. As a result, DOL officials told us these comments are 

not typically useful in gaining insight into the retirement industry’s 

perception of the challenges they experience with the Form 5500. 

49 Before requiring or requesting information from the public, the PRA requires federal 

agencies to (1) seek public comment on proposed collections and (2) submit proposed 

collections for review and approval by OMB. OMB’s Office of Information and Regulatory

Affairs reviews agency information collection requests for approval or disapproval. Under 

PRA, OMB may approve collection for up to 3 years at a time. To extend the expiration 

date of a collection, an agency must provide the public with an opportunity to comment on 

the continuation of the collection and resubmit the information collection request.

DOL, IRS, and

PBGC Face 

Administrative, 

Statutory, and 

Contractual 

Challenges to 

Collecting More 

Useful Form 5500 

Information

Agencies’ Administrative 

Processes for Revising the 

Form and Limited Efforts 

to Solicit Stakeholder Input 

Pose Challenges
 

Page 29 GAO-14-441 (Form 5500) 

Through a separate effort, IRS also solicits input from stakeholders 

through the Information Reporting Program Advisory Committee (IRPAC), 

which consists of members of the IRS tax form professional community, 

such as accounting firms and financial services firms, and meets 

approximately five times a year to discuss issues with all IRS forms. 

Published IRPAC reports for the last 3 years have included only one 

recommendation related to making material changes to the Form 5500.50

The agencies also use informal methods to solicit stakeholder feedback, 

but do not systematically collect feedback on an ongoing basis. Officials 

noted that they attend industry conferences and other venues throughout 

the year to maintain an informal, ongoing communication with the filing 

community and often receive comments or suggestions for changes to 

the form. Additionally, DOL and IRS have call centers that handle 

questions related to the form, although we found the information collected 

from these calls was limited. Specifically, DOL officials told us they only 

collect substantive data on more complex questions call center staff are 

unable to answer. These calls—representing about 10 percent of calls—

are forwarded to DOL’s Office of the Chief Accountant. Similarly, IRS 

officials noted that the call centers do not track substantive data on the 

types of questions received and call center staff do not answer specific 

questions on the Schedules, but may forward them to knowledgeable IRS 

officials. These officials track information on the questions they receive, 

which can be used to gain some insight into issues such as lack of form 

clarity. While PBGC does not have its own Form 5500 call center, the 

DOL call center forwards specific questions or issues to PBGC. However, 

officials from all three agencies noted that calls are not generally about 

suggesting changes to the form. In addition to using call centers, 

stakeholders may choose to provide the agencies comments on various 

aspects of the form at any time. DOL provided us with a few examples of 

letters they received from stakeholders regarding suggested 

In addition, according to PBGC, the Intersector Group, which is 

composed of representatives from the American Academy of Actuaries, 

Society of Actuaries, Conference of Consulting Actuaries, and ASSPA, 

meet twice a year with PBGC and IRS to discuss regulatory and other 

issues affecting pension practice, including issues involving the Form 

5500.

 

50 The 2010 IRPAC Annual Report contained a recommendation for IRS to clarify the 

rules and procedures for obtaining EINs for qualified plans and trusts, including 

encouraging plan sponsors to obtain a trust EIN for qualified plans.

Brief Summary of the Informal Rulemaking 

Process under the Administrative 

Procedure Act (APA)

Making changes to the Form 5500 using the 

informal rulemaking process requires a 

number of steps, including, but not limited to, 

the following:

• Agency Develops Proposed Rule:

The agency drafts a notice of proposed 

rulemaking which proposes to add, 

change, or delete regulatory text. 

Proposed rules determined to be 

“significant” are subject to review by 

OMB.

• Publication of Proposed Rule and 

Request for Public Comment: Proposed 

rules are published in the Federal 

Register and include a request for public 

comment. The standard comment period 

is 60 days.

• Agency Prepares the Final Rule: In 

developing the final rule, the agency 

considers comments submitted by the 

public in response to the proposed 

regulation. The final regulation sets forth 

the regulatory changes and may vary 

from the proposed rule. Final rules 

determined to be “significant” are subject 

to review by OMB prior to their publication 

in the Federal Register. 

• Publication of Final Rule: The final 

regulation is published in the Federal 

Register. 

Source: GAO analysis of 5 U.S.C. § 553 and The Reg Map 

Informal Rulemaking, ICF Consulting with the cooperation of 

the U.S. General Services Administration’s Regulatory 

Information Service Center, available at: 

http://www.reginfo.gov/public/reginfo/Regmap/index.jsp.
 

Page 30 GAO-14-441 (Form 5500) 

improvements. These letters included suggestions also mentioned by our 

panelists, including aligning service provider fee disclosure requirements 

and standardizing plan asset reporting.

Despite agencies’ efforts to solicit stakeholder input through rulemaking 

and other means, stakeholders expressed concerns about their ability to 

fully participate in the Form 5500 change process. Specifically, several 

made the following observations about the agencies’ efforts to solicit 

input:

• agency officials are not clearly conveying to stakeholders at 

conferences and other venues that they wish to solicit feedback and 

comments;

• the agencies’ overall efforts to solicit informal input is not apparent;

• DOL and IRS did not appear interested in the thoughts of the filing 

community regarding changes to the form; and

• DOL and IRS generally do little to solicit input from non-government 

stakeholders even when taking into consideration the notice and 

comment process, although the agencies solicit direct input from 

stakeholders on an ad hoc basis.

Additionally, while the agencies have solicited comments through 

rulemaking processes and other means, several found that these 

methods do not necessarily allow the public to contribute to changes that 

would be most beneficial for non-federal stakeholders. One stakeholder 

stated that it would be beneficial if the agencies consulted both preparers 

and the employee benefits plan industry early in the development of 

changes using focus groups and other means of advance testing. 

However, none of the agencies have used advance testing methods, 

such as focus groups, in-person observations, or users’ perception of 

forms and questions, to obtain non-governmental stakeholder input into 

changes to the form, despite recent OMB guidance advising such a 

process be used for complex forms. While DOL officials did not view 

these techniques as helpful—stating that it would add costs and time and 

that they were not sure it would help gather constructive, actionable 

feedback from the filing community—the agency has used focus groups 

in the rulemaking process to improve the readability of disclosure 
 

Page 31 GAO-14-441 (Form 5500) 

notices.51 IRS officials have also noted the potential value in using 

advance testing methods, stating that some agency sections use these 

methods in the development and revisions of tax forms and that IRS was 

willing to consider it for the Form 5500. Further, officials noted that the 

IRS considered advance testing when developing an annual report 

pension plans file to identify separated participants with deferred vested 

benefits, although they ultimately decided to use a notice and public 

comment process.52 The agency revised the instructions the year after 

the form was adopted due to confusion that one official noted may have 

been avoided had the form been advance tested.

The IRS has significantly limited its Form 5500 data collection due to a 

statutory prohibition on mandatory electronic filing. Currently, the IRS is 

prohibited by statute from requiring persons who file fewer than 250 

returns annually to submit information electronically, with limited 

exceptions.53

 

51 Most recently, in a March 2014 Federal Register Notice DOL announced it will conduct 

focus groups to evaluate the effectiveness of 408(b)(2) fee disclosures. Proposed 

Information Collection Request Submitted for Public Comment; Evaluating the 

Effectiveness of the 408(b)(2) Disclosure Requirements, 79 Fed. Reg. 14,085 (March 12, 

2014). This effort is being undertaken in connection with new amendments to the 

408(b)(2) regulation DOL is also proposing. Amendment Relating to Reasonable Contract 

or Arrangement Under Section 408(b)(2) – Fee Disclosure, 79 Fed. Reg. 13,949 (March 

12, 2014)(to be codified at 29 C.F.R. pt. 2550).

Consequently, IRS removed all information collected 

exclusively for its benefit from Form 5500 once DOL moved the form to 

an exclusively electronic filing platform in 2010. As a result, some IRSonly information is no longer collected in any manner, while other 

information that IRS is statutorily required to collect was moved to newly 

created paper-based forms. For example, information on minimum 

coverage—used to determine whether employees that qualify for 

retirement benefits are properly included—is no longer collected. 

Conversely, the IRS issued Form 8955-SSA starting in plan year 2009 to 

satisfy its statutory obligation to provide these data for the Social Security 

Administration (SSA).

52 These tests involved Form 8955-SSA (Annual Registration Statement Identifying 

Separated Participants With Deferred Vested Benefits), which IRS administers on behalf 

of the Social Security Administration.

53 26 U.S.C. § 6011(e). 

Statutory Prohibition

on Mandatory Electronic 

Filing Limits IRS 

Information Collection

on the Form 5500
 

Page 32 GAO-14-441 (Form 5500) 

Since IRS has stopped collecting certain data elements using the Form 

5500, it has expressed concerns about its ability to effectively conduct 

enforcement activities and to remain current with any statutory and other 

changes to plans. Further, IRS enforcement officials told us they are no 

longer able to include data that had been collected via the Form 5500 in 

the risk models used to identify plans for audits. The Department of the 

Treasury Inspector General for Tax Administration (TIGTA) examined this 

issue in 2011 and found that information formerly collected was used to:

• identify abusive transactions,

• identify funding or minimum coverage requirements issues, and

• conduct special projects to target potentially noncompliant retirement 

plans.54

Both TIGTA in its report and IRS officials were concerned that the lack of 

these data would impact IRS’ ability to effectively focus on specific 

indicators of noncompliance when selecting plans for examination. 

Specifically, officials noted such information would allow them to better 

identify noncompliant plans which would, in turn, reduce plan burden and 

unnecessary examinations. IRS officials also told us that it has resorted to 

obtaining much of these data while conducting audits rather than to 

inform the selection of plans to audit, preventing them from taking an 

efficient risk-based approach to enforcement. Additionally, IRS officials 

were concerned that their inability to require electronic data collection 

further hindered their ability to enforce tax provisions that also serve to 

protect pension benefits, as they are unable to revise the form to collect 

new plan data critical to compliance and enforcement.

Although officials stated that anything short of a statutory change would 

fall short of achieving the full efficiency of mandatory electronic filing, IRS 

has made other efforts to foster electronic filing and to allow for more 

flexibility in making changes to the form.55

 

54 Treasury Inspector General for Tax Administration (TIGTA) report, The Employee Plans 

Function Should Continue Its Efforts to Obtain Needed Retirement Plan Information, 

September 20, 2011, 2011-10-108.

Specifically IRS has:

55 Federal laws and regulations also prescribe the conditions that must be met for plans 

sponsors to use electronic means to provide disclosures to plan participants. For more 

information on that topic see GAO, Private Pensions:
 

Page 33 GAO-14-441 (Form 5500) 

• negotiated with DOL to use the form to collect some data that would 

be of interest to IRS (pursuant to DOL’s authority in light of the 

limitation on IRS’s authority),

56

• included in the past 4 years of the President’s Budget Request, a 

legislative proposal to provide Treasury with the authority to require 

additional information be included in electronically filed Form 5500 

annual reports, and 57

• initiated regulatory action governing electronic filing by proposing in 

August 2013 regulations that would require electronic filing for plan 

sponsors and others who file more than 250 returns annually.58

Despite these efforts, IRS officials noted that the agency is still required to 

maintain a parallel paper filing system for those who file fewer than 250 

returns annually and do not voluntarily elect to file electronically. The 

processing of paper Form 5500s was proven to be more burdensome and 

inaccurate. In June 2005, we found that paper-based processing took 

three times longer and had twice as many errors than electronically 

processed returns.59

 

Revised Electronic Disclosure Rules Could Clarify Use and Better Protect Participant 

Choice,

Additionally, while the IRS has a goal to receive 80 

percent of all major tax types of tax returns electronically, the Form 5500, 

which is filed electronically with DOL, is not included in this goal. For the 

private plan data IRS continues to collect, such as the Form 8955-SSA 

and the Form 5500-EZ, IRS maintains both paper and electronic 

GAO-13-594 (Washington, D.C.: September 2013).

56 While IRS officials noted that not all their negotiations with DOL were successful, they 

were able to add questions related to ESOP on the Schedule R under DOL authority as 

these were issues also under the agency’s jurisdiction.

57 Department of Treasury, Congressional Justifications of Appropriations for FY 2015, 

2014, 2013, and 2012.

58 Employee Retirement Benefit Plan Returns Required on Magnetic Media, 78 Fed. Reg. 

53,704 (Aug. 30, 2013)(to be codified at 26 C.F.R. pt. 301). The comment period closed 

on October 29, 2013. IRS has not yet issued the final regulation.

59 GAO-05-491. 
 

Page 34 GAO-14-441 (Form 5500) 

systems—with paper potentially costing over 20 times more than 

electronic.60

DOL, IRS, and PBGC have identified form changes that would improve 

data collection, but have made limited changes under the current 

EFAST2 contract. The tri-agency Form 5500 working group meets 

regularly to identify and discuss annual changes to the form; however, as 

DOL officials noted, the working group is not a decision-making body, and 

the ultimate decision to make changes—with any associated 

administrative and fiscal burdens—comes from each agency’s various 

authorities. According to IRS and DOL officials, in 2010 the agencies 

agreed to impose a “no change year” where they disallowed material 

changes that would need to be pursued through the rulemaking process 

based on the desire for the EFAST2 contractor to focus on any problems 

associated with the new system roll out. After 2010, according to DOL, 

each agency could independently request form changes at their discretion 

based on their respective authority, budget, and policy considerations and 

constraints. However, IRS cannot currently make changes to the 

electronic form under the EFAST2 contract because the agency is 

statutorily prohibited from requiring electronic filing. Generally, the 

agencies have made minimal changes to the plan investment and service 

provider fee information in the form. According to a recent DOL IG report, 

from fiscal years 2010-2012, the tri-agency Form 5500 working group

proposed 13 form changes of which 7 were adopted. Adopted changes 

were minor or pursuant to new laws.61

 

60 In November 2013, we issued a report examining required pension plan reports and 

disclosures and recommended that Congress consider legislation shifting the 

responsibility and necessary resources of collecting Form 8955-SSA information to DOL, 

which has the authority to require electronic collection. See 

The working group is finalizing its 

revisions for 2014, and has begun its discussions for 2015. 

GAO-14-92. A statutory 

change that would authorize IRS to require electronic filing of Form 5500 information 

would negate the need to shift this responsibility. 

61 According to DOL, they engaged in notice and comment rulemaking process to add 

questions regarding Form M-1 Compliance by group health plans beginning with plan year 

2013 to address statutory changes made to ERISA by the Patient Protection and 

Affordable Care Act. Also, IRS and PBGC made focused changes to the Form 5500 

actuarial schedules. Also, in 2010 the agencies made form and instruction changes in 

response to industry requests for an “e-signature alternative” that allows a third party 

service provider to register for Form 5500 filing and signing credentials.

Agencies’ Concerns

with Contractual Costs 

Limits Action on Desirable 

Form Changes
 

Page 35 GAO-14-441 (Form 5500) 

While officials from DOL and PBGC stated that they could elect to make 

changes to the form under the current EFAST2 contract, specific 

contractual limitations apply. The contract provides that the contractor 

shall update and adapt EFAST2 to accommodate changes in the form

from plan year to plan year. The contract further provides that the 

contractor is responsible for changes that are “typical” in number and 

substance. Specifically, the contract provides that typical changes are 

generally minor and related to system functionality. Under the current 

contract, the contractor is responsible for implementing a typical level of 

no-cost annual changes into the system at no additional cost to the 

government. For example, the agencies did not incur additional costs for 

the seven minor or legislative changes made by the tri-agency working 

group between fiscal years 2010 and 2012. However, the contract 

stipulates that in the event of non-typical changes, the contractor and 

government shall work collaboratively to determine an approach for 

working through the contractual and/or cost implications.

Given the potential additional associated costs with non-typical changes, 

among other reasons, DOL and PBGC officials generally expressed 

reluctance to make desirable changes, including those identified during 

the annual tri-agency review. While DOL, IRS, and PBGC officials 

expressed concern that non-typical changes would be costly, none of the 

agencies have obtained cost estimates for potential changes.62

 

62 According to PBGC, while the agencies have inquired with the DOL’s EFAST Program 

Management Office and the EFAST2 contractor to request cost estimates, they ultimately 

decided not to obtain those estimates because of the additional costs that would be 

incurred to obtain those cost estimates, as well as the fact that cost estimates may not be 

accurate.

Despite 

this lack of information on potential additional costs, agency officials have 

determined that any cost above the current contract costs would be 

considered too costly to implement. For example, in addition to the added 

cost of making non-typical changes, DOL officials noted that 

accommodating such changes to the Form 5500 into EFAST2 would 

require contract modifications. Agency officials also noted that they view 

the contract provision related to non-typical changes as inflexible, despite 

the ability to negotiate these changes and associated costs. To address 

these concerns, DOL officials told us that as part of their 21st Century 

initiative, they have begun to prepare for the next contract, scheduled for 

2020, and are considering various contractual and system developmental 

methodologies that could provide more flexibility in adjusting the 
 

Page 36 GAO-14-441 (Form 5500) 

processing system to accommodate significant forms changes. However, 

officials noted that such additional flexibility would likely increase the cost 

of the contract.

The Form 5500 is the primary source of information covering $6.35 trillion 

in pension assets in plan year 2011 and the over 130 million participants 

and beneficiaries relying on these funds for a secure retirement. For 

years, we and others have raised concerns regarding the data collected 

via the Form 5500. The challenges identified by our broad-based panel, 

while not generalizeable to the broader filing community, provide insight 

into the difficulties that preparers, researchers, and participant advocates 

still face with respect to reporting and analyzing critical information on 

plan investments and fees. The challenges preparers expressed are 

particularly troubling as DOL and IRS depend on this information to 

conduct crucial compliance and enforcement activities. As OMB guidance

has suggested, poorly designed and unduly complicated forms can prove 

difficult and confusing to complete. Moreover, if enforcement agencies 

are working from incomplete, inconsistent, and incomparable data to 

understand, assess, and oversee plans, vital enforcement activities may 

be at risk. Despite these long-standing concerns, agency officials have 

made only routine changes to the plan investment and service provider 

fee information in the form over the last 3 years.

While the rulemaking process and other informal efforts to solicit 

stakeholder input have provided opportunities for public reaction to 

proposed changes to the form, these opportunities have been limited and 

they have not, as OMB guidance suggests, allowed for sufficient input to 

help shape changes to the form. This input could reduce the agencies’ 

costs of making subsequent changes, improve filer comprehension, and 

increase the comparability and reliability of data provided. In addition, it is 

important that all agencies have the authority to require useful information 

be collected in a more efficient electronic reporting format. Electronic filing 

would present an opportunity to reduce costs and potential errors, 

increase the quantity and quality of information available, and allow for 

more timely use of the data in protecting the retirement security of 130 

million participants. IRS currently lacks the authority to fully address this 

challenge and, without legislative intervention, will not have all the 

information it needs to protect the nation’s retirement assets. The 21st 

Century Plan initiative provides a unique opportunity to address longstanding challenges, identify ways to meet the needs of both federal and 

non-federal stakeholders, and significantly improve the efficiency, 

usefulness, and integrity of the information collected. However, the 

Conclusions
 

Page 37 GAO-14-441 (Form 5500) 

inherent risks of incomplete, inconsistent, and incomparable data warrant 

immediate action and, as the only nationally-representative data on over 

$6 trillion in employee benefits, it is critical that these data be of the 

highest quality.

To improve the usefulness, reliability, and comparability of Form 5500 

data for all stakeholders while limiting the burden on the filing community, 

we recommend the Secretaries of DOL and Treasury, and the Director of 

PBGC consider implementing the findings from our panel when modifying 

plan investment and service provider fee information, including:

• revise Schedule H plan asset categories to better match current 

investment vehicles and provide more transparency into plan 

investments;

• revise the Schedule of Assets attachments to create a standard 

searchable format;

• develop a central repository for EIN and PN numbers for filers and 

service providers to improve the comparability of form data across 

filings;

• clarify Schedule C instructions for direct, eligible indirect, and 

reportable indirect compensation so plan fees are reported more 

consistently and, as we recommended in the past, better align with 

the 408(b)(2) fee disclosures; and

• simplify and clarify Schedule C service provider codes to increase 

reporting consistency.

To ease the burden on preparers and ensure the collection of consistent 

and reliable data, we recommend that the Secretaries of DOL and 

Treasury, and the Director of PBGC conduct advance testing—such as 

focus groups, in-person observations and users’ perception of forms and 

questions—as appropriate and before proposing major changes to the 

form for public comment, in addition to its other outreach efforts.

To improve IRS’s enforcement and compliance efforts, decrease the 

administrative and financial burden of maintaining both electronic and 

paper-based form processing systems, and reduce plan reporting costs, 

Congress should consider providing the Department of the Treasury with 

the authority to require that the Form 5500 series be filed electronically.

Recommendations for 

Executive Actions

Matter for 

Congressional 

Consideration
 

Page 38 GAO-14-441 (Form 5500) 

We provided a draft of this report to DOL, Treasury, and PBGC for 

review. PBGC generally agreed with our recommendations. DOL and 

Treasury did not state whether they agree or disagree with our 

recommendations; but, they stated that actions are underway that would 

address our first recommendation. GAO continues to believe the 

recommendations are still valid. DOL, Treasury, and PBGC comments 

are reproduced in appendices IV, V, VI respectively. 

PBGC agreed with our first recommendation and stated that the form’s 

current plan asset categories do not provide users with the means to 

identify the nature of plan investments and the level of investment risks, 

adding that improvements in this area are critical to PBGC’s efforts to 

protect and sustain their insurance programs and monitor plan financial 

status. PBGC also stated it will work with Treasury and DOL as part of the 

21st Century Initiative to address challenges identified in our report. DOL 

and Treasury did not state whether they agreed or disagreed with the 

recommendations. DOL stated that in 2013 DOL, Treasury, and PBGC 

initiated an overall re-examination of the Form 5500, as part of the 21st 

Century Initiative, whose scope includes all of our recommendations for 

improvement of Form 5500 plan investment and service provider fee 

information. While we agree that the 21st Century Initiative was formed 

during our review in 2013, DOL only provided internal deliberative 

materials that reflected preliminary thoughts on possible areas for change 

in the form. Furthermore, our recommendation calls for more than just 

identification of potential improvements, it calls for action to be taken by 

the agencies to implement these modifications to the form. Treasury 

noted that the concerns identified in our study appear valid and the 21st 

Century Initiative would address some of the suggested changes in our 

recommendation. However, Treasury noted that it would defer to DOL on 

suggested changes to service provider fee information since Schedule C 

is solely within DOL’s jurisdiction. Regarding developing a central 

repository of Employer Identification Numbers and Plan Numbers, 

Treasury said that it could improve the comparability of form data across 

filings and it would need to evaluate the impact of this recommendation in 

light of major, ongoing initiatives across the IRS to reduce the risk of 

identity theft and protect taxpayer privacy.

PBGC agreed with our second recommendation, and stated that it would 

work with DOL and Treasury to explore options to conduct advance 

testing when making revisions to the form. Treasury and DOL did not 

state whether they agreed or disagreed with the recommendation. 

Treasury said it would consult with DOL and PBGC on the potential 

benefits and costs of conducting advance testing before proposing 

Agency Comments 

and Our Evaluation
 

Page 39 GAO-14-441 (Form 5500) 

changes to the form. DOL noted that advance testing can be helpful in 

some cases, but expressed concerns that conducting advanced testing of 

Form 5500 changes would require additional expense and delay in their 

lengthy process of making changes to the form. DOL said that changes to 

the form already include a very transparent and public process of notice 

and comment rulemaking. However, as noted in the report, stakeholders 

we spoke to expressed concerns about their ability to fully participate in 

the Form 5500 change process, noting that agency efforts to solicit 

feedback were not apparent. DOL also stated that success of the Form 

5500 depends on the careful management of software, technology, 

procurement, and regulatory structures and input from the Form 5500 

reporting community, which includes a myriad of stakeholders. It is for 

these reasons that we believe DOL, Treasury, and PBGC should undergo 

advance testing prior to proposing major changes to the form. Such input 

could help ensure that any changes are understood by the service 

provider and filing community to improve the reliability of the information 

reported, potentially reduce the burden of annual reporting, and provide 

greater transparency to all users of form data. We recognize the 

complexity involved in making changes to the Form 5500 and the variety 

of stakeholders affected by any changes. Because of this complexity, we 

feel that it is important to increase input from non-government 

stakeholders to minimize misunderstanding and confusion and reduce the 

need to make additional revisions to changes after they are implemented 

in various systems. This outreach would also have the added bonus of 

increasing user awareness and understanding of what the form requires.

In responding to our draft report, DOL also expressed concern regarding 

our characterization of recent changes to the Form 5500. Specifically, 

DOL stated that the report criticizes the agencies for making “minimal 

changes to the form over the last 3 years” and asserts that the process of 

making form changes has largely been impeded by “reluctance” on the 

part of the agencies to engage in negotiations with the contractor that 

operates the EFAST2 about the possible costs of such changes. DOL 

stated that the Form 5500 recently was subjected to a major public notice 

and comment revision in connection with the agencies’ move to a wholly 

electronic form processing system (EFAST2), and identified other 

important changes that have occurred over the 3 year time period 

referenced in our report. However, the changes mentioned in DOL’s 

comments do not relate to Form 5500 plan investment and service 

provider fee information. Nonetheless, we amended our report to include 

these actions taken by the agencies to make changes to other areas of 

the form. In our report we acknowledge that the agencies face significant 

administrative, statutory, and contractual challenges to collecting and 
 

Page 40 GAO-14-441 (Form 5500) 

revising the Form 5500. For example, we noted DOL’s lengthy informal 

notice and comment rulemaking process under the Administrative 

Procedure Act (APA) as well as Treasury’s statutory prohibition on 

mandatory electronic filing. As we noted in the report, while DOL, IRS, 

and PBGC officials expressed concern that non-typical changes would be 

costly, none of the agencies have obtained cost estimates for potential 

changes. 

Each agency also provided technical comments, which we incorporated 

as appropriate.

As arranged with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from the 

date of this letter. At that time, we will send copies to the Secretary of 

Labor, Secretary of the Treasury, and Director of the Pension Benefit 

Guaranty Corporation. In addition, the report will be available at no 

charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please 

contact me at (202) 512-7215 or jeszeckc@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix VII.

Sincerely yours,

Charles A. Jeszeck, Director

Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-14-441 (Form 5500) 

Our study sought to examine the following research objectives:

1. Aspects of the Form 5500 Annual Return/Report of Employee 

Benefit Plan (Form 5500) information on plan investments 

stakeholders find problematic, 

2. Aspects of the Form 5500 information on service provider fees 

stakeholders find problematic, 

3. Challenges the Department of Labor (DOL), the Department of the 

Treasury’s Internal Revenue Service (IRS), and the Pension Benefit 

Guaranty Corporation (PBGC) face in collecting and revising key 

annual reporting information on plan investments and service provider 

fees needed from plan sponsors. 

To address these research objectives, we used various databases and 

search tools to identify agency, industry, and academic publications and 

notices on Form 5500 reporting requirements. We also reviewed 

regulations and agency guidance on changes to these requirements. We 

focused our review on our key objectives: disclosure requirements 

regarding plan investments and service provider fees. This research 

helped us develop key themes for our two-phase survey of nongovernment stakeholders. Additionally, we reviewed relevant federal 

laws, regulations, and agency documentation and guidance related to the 

administration and maintenance of the Form 5500 series, including 

proposed rules, documentation of current initiatives aimed towards Form 

improvement, and the ERISA Filing Acceptance System (EFAST2) 

vendor contract.

To address the research questions in terms of recent changes to Form 

5500’s disclosure requirements and possible issues related to the form, 

we conducted interviews with knowledgeable individuals and 

organizations and reviewed relevant agency documents. Specifically, we 

conducted interviews with relevant officials at DOL, IRS, and PBGC. We 

also conducted interviews with non-government parties who interact with 

the Form 5500 in different ways—representatives of plan sponsors, 

service providers, retirement consultants, attorneys, and researchers—to 

learn how they use the form and what recent challenges, if any, they have 

encountered. In addition, we reviewed a nonrepresentative sample of 20 

Form 5500 Annual Return/Report filings—10 defined contribution plan 

filings and 10 defined benefit plan filings—from the DOL’s 2012 Freedom 

of Information Act EFAST2 Form 5500 data set to find potential examples 

of some of the challenges identified by non-government Form 5500 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-14-441 (Form 5500) 

stakeholders. Specifically, we limited our universe of plan fillings based 

on the following criteria:

• filings with plan year ending in calendar year 2012,

• filings for a defined benefit or defined contribution plan,

• filings that included a Schedule C, H, and a Schedule of Assets 

Attachments, and

• filings that have a non-zero value in the “Other” plan asset category in 

Schedule H.

Based on these criteria, our universe included 4,782 defined contribution 

plans and 1,361 defined benefit plans. Then, we randomly selected 10 

records from defined benefit plans and defined contribution plans from the 

universe for review. We chose to pull our sample from the Form 5500 

dataset for the 2012 plan year because it was the most current and 

accurate dataset available as of December 2013. To assess the reliability 

of DOL’s data, we conducted data reliability discussions with EBSA 

officials to understand the limitations to the data and ensure we were 

using the correct variables to develop our universe of plans to sample. 

We found the dataset to be sufficiently reliable for the purposes of our 

study.

To further address the first and second research questions, we gathered 

the opinions of a non-representative sample of professionals outside 

government who interact with the Form 5500 or rely on it in their work by 

conducting a two-phase questionnaire survey of a panel of 43 nongovernment stakeholders. We identified initial candidates for this panel 

from the following sources:

• Contacts developed from past reports related to employee benefit 

plan investment and service provider fee information,

• Participants in our 2011 and 2012 Comptroller General’s Retirement 

Security Advisory Panel sessions,

• Form 5500 users identified by the DOL

• Large pension and investment plan administrators and plan 

consultants, and

• Contacts obtained during interviews and research for our present 

study.

Two-phase Online

Panel Survey
Appendix I: Objectives, Scope, and 

Methodology

Page 43 GAO-14-441 (Form 5500) 

To ensure we had a range of views in our panel, we identified 

stakeholders from several backgrounds: representatives of plan 

sponsors, participants, and service providers; researchers and 

academics; and other subject matter experts from relevant national 

organizations. We contacted an initial list of 102 stakeholders to explain 

our research, invite them to participate in our panel, and ask for the 

names of other potential panelists who may have had expertise in this 

area. This allowed us to both expand our initial list of potential panelists 

and to validate the relevance of the potential panelists we had already 

identified. To be eligible for the panel, we required stakeholders to have 

at least 5 years of experience with Form 5500. We categorized eligible 

panelists into one of three groups: representatives of participants, 

representatives of plan sponsors and their service providers, and 

researchers. Of the 102 stakeholders we contacted, 43 stakeholders were 

eligible and agreed to participate in our two-phase panel survey. Panelists 

had an average of 16 years experience with the Form 5500. In the first 

phase, we asked this sample of panelists to identify challenges with the 

Form 5500 plan investment and service provider fee data collection, and 

to suggest changes that could improve the efficiency, clarity, and 

usefulness of those data. We compiled their answers and aggregated 

them into lists of distinct challenges and suggested changes. In the 

second phase, we asked panelists to rate the importance and potential 

impact of those challenges and suggested changes respectively. The 

numbers of panelists surveyed and the sample outcomes of this nonprobability sample over both phases are shown in table 4. Additional 

details of the design and administration of the two phases are provided 

below.
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-14-441 (Form 5500) 

Table 4: Participation by Form 5500 Stakeholder Type Throughout Two-phase Online Panel Survey 

Plan Participants

Plan Sponsors and 

their Service 

Providers Researchers Total

Initial sample 14 16 13 43

First phase

Contacted for first phase (updated rolesa) 11 18 14 43

Ineligible 2 b 0 0 2 

No response 2 1 3 6 

Completed first phase 7 17 11 35

Second phase

Contacted for second phase 7 17 11 35

No response 1 2 0 3 

Completed second phase 6 15 11 32

Source: GAO summary of participation in GAO two-phase Form 5500 stakeholder panel.

a

During our initial contacts with sampled panelists, we determined that of three stakeholders initially 

self-identifying their primary roles as plan participants, two were best categorized as plan sponsors 

and one as a researcher.

b

We determined two panelists were ineligible because they didn’t meet our minimum requirement of 

having 5 years with the Form 5500

In the first phase of the survey, which was conducted from May 28th to 

July 9th, 2013, we asked panelists questions about their roles and 

experiences related to Form 5500 and asked them to describe, in two 

open-ended questions, any specific challenges that (1) plan investment 

information, and (2) service provider and fee information collected on the 

Form 5500 presented for their work. We then asked them, in two 

corresponding open-ended questions, to suggest potential changes to 

improve the form. The wording of the four key open-ended questions is 

presented in table 5 below.
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-14-441 (Form 5500) 

Table 5: Key Questions from the Phase 1 Online Questionnaire from the Two-Phase Form 5500 Stakeholder Panel

Plan investment questions

1 What, if any, CHALLENGES does the plan investment information

2 

currently required to be reported on the Form 5500, 

including Schedules and attachments or related instructions, present for your work? This includes plan investment 

information on Schedules A, D, H, or I, or any other part of the Form 5500. Examples of challenges include the Form’s 

instructions being unclear, requiring information in a format that is inconsistent with industry reporting practices, reporting some 

data in a way that hinders your research, or omitting details that would be helpful in your understanding of a plan’s financial 

status. Please describe one issue per row below. The boxes in the web form will expand as you type

What, if any, CHANGES to the Form 5500 plan investment information, including Schedules and attachments or related 

instructions, would you suggest to improve the clarity, efficiency, or usefulness of plan investment information for 

your work? This includes plan investment information on Schedules A, D, H, or I, or any other part of the Form 5500. 

Suggestions can include additions, deletions, or other changes. These changes can be unrelated to the challenges you 

mentioned earlier

Service provider fee questions 

. Please provide one suggestion per row below. The boxes in the web form will expand as you type. 

3 What, if any, CHALLENGES does the service provider and fee information

4 

currently required to be reported on the 

Form 5500, including Schedules and attachments or related instructions, present for your work? This includes service 

provider and fee information on Schedules A or C or any other part of the Form 5500. Examples of challenges include the 

Form’s instructions being unclear, requiring information in a format that is inconsistent with industry reporting practices, reporting 

some data in a way that hinders your research, or omitting details that would be helpful in your understanding of a plan’s 

financial status. Please describe one issue per row below. The boxes in the web form will expand as you type. 

What, if any, CHANGES to the Form 5500 service provider and fee information, including Schedules and attachments or 

related instructions, would you suggest to improve the clarity, efficiency, or usefulness of service provider and fee 

information for your work? This includes service provider and fee information on Schedules A or C or any other part of 

the Form 5500. Suggestions can include additions, deletions, or other changes. These changes can be unrelated to the 

challenges you mentioned earlier

Source: Phase 1 online questionnaire from the Two-Phase Form 5500 Stakeholder Panel.

. Please provide one suggestion per row below. The boxes in the web form will expand as you 

type.

Thirty-five of the 43 panelists completed the first phase of the survey, and 

two of the original panelists had been determined ineligible during the 

survey due to insufficient experience with the form, resulting in an 85 

percent response rate. Panelists who did not complete the first phase 

were dropped from the panel and did not participate in the second phase.

We performed a content analysis on responses from the first phase to the 

four open-ended questions to aggregate responses into lists of distinct 

challenges and suggested changes. Two GAO analysts developed an 

initial coding scheme and coded each of the participant’s responses 

together and, when necessary, the coding scheme was updated to reflect 

participants’ responses. We re-contacted respondents when a response 

to be coded was unclear. Any disagreements in coding decisions were 

discussed until consensus was reached. A third GAO analyst reviewed a 

sample of the coded responses to check the validity of the coding 

decisions. We used the lists of coded answers to each of the four survey 
Appendix I: Objectives, Scope, and 

Methodology

Page 46 GAO-14-441 (Form 5500) 

questions to develop closed-ended rating questions for the second phase 

of the survey.

In the second phase of the survey, which was conducted from October 

23rd to December 11th, 2013, we asked each panelist to rate the 

significance of the challenges and the impact of the suggested changes 

the panel had collectively identified in the first phase. Specifically, in the 

second phase panelists were asked whether each potential challenge 

was “Not at all,” “Slightly,” Moderately,” “Very,” or “Extremely” significant 

or if they had “No basis to judge,” and were asked whether each 

suggested change would have “Very negative,” “Somewhat negative,” 

“Neutral,” “Somewhat positive,” or “Very positive” impact or if they had 

“No basis to judge.” Usable responses were provided by 32 of the 35 

participants in the second phase, resulting in an overall response rate of 

78 percent across both phases. Because the surveys were not 

administered to a probability sample of all Form 5500 stakeholders, the 

results cannot be statistically generalized to all Form 5500 stakeholders; 

the results describe only the experiences and opinions of the 

stakeholders we included in our panel. Tabulations of the results of the 

Phase 2 ratings and corresponding question wording are presented in 

appendix II.

We administered both phases of the survey over the Internet. For both 

phases, we sent each stakeholder an email invitation to complete the 

survey on a GAO web server using a unique username and password. 

Because our sample of panelists constituted the entire, unique population 

of stakeholders we had identified, the survey results are not subject to 

sampling error. However, the practical difficulties of conducting any 

survey may introduce other errors. We took steps to minimize errors in 

measurement, from nonresponse, and in data processing.

To minimize the risk of measurement error, we designed draft 

questionnaires for both phases in close collaboration with GAO survey 

specialists. Two independent GAO staff members familiar with Form 5500 

provided technical comments on the draft questionnaires. We pretested 

the questionnaires in paper form with 5 individuals representing the range 

of our stakeholders (representatives of plan sponsors and their service 

providers, representatives of plan participants, and researchers). We 

made revisions of the questionnaires based on these efforts before we 

finalized the surveys. We applied eligibility criteria in the selection of our 

panelists to ensure that they had sufficient qualifications for their role. We 

performed quality checks on response data to identify and edit specific 

response errors. 
Appendix I: Objectives, Scope, and 

Methodology

Page 47 GAO-14-441 (Form 5500) 

To reduce the impact of nonresponse error, panelists received several 

emails and phone calls encouraging them to complete the surveys. To 

increase participation and the validity of answers, panelists were informed 

that their personally-identifiable information would not be linked to their 

responses during the survey nor in the final report. We examined the 

distribution of those not responding across the three stakeholder 

categories in the survey population, and determined that response rates 

did not differ markedly across them. A second analyst checked the 

accuracy of all computer analyses to minimize the likelihood of errors in 

data processing.

We conducted our work from November 2012 to June 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Selected Results for Suggested 

Changes to Plan Investment and Service 

Provider Fee Information from the Phase 2 

Survey of our Two-phase Form 5500 

Stakeholder Panel

Page 48 GAO-14-441 (Form 5500) 

In the second phase of the survey of our two-phase Form 5500 

stakeholder panel, we asked each panelist to rate the significance of the 

challenges and impact of the changes the panel had collectively identified 

in the first phase. In the second phase, panelists were asked whether 

each potential challenge was “Not at all”, “Slightly”, “Moderately”, “Very”, 

or “Extremely” significant or if they had “No basis to judge”, and were 

asked whether each suggested change would have “Very negative”, 

“Somewhat negative”, “Neutral”, “Somewhat positive”, or “Very positive” 

impact or if they had “No basis to judge.” 

For plan investment changes, we specifically asked: How much of a 

positive or negative impact (please consider costs, resources, burden, 

and benefit) for your (and your clients’) work would each of the following 

potential changes to Form 5500 have on the overall clarity, efficiency, or 

usefulness of plan investment information? Table 6 lists the top plan 

investment potential changes indicated by survey respondents.

Table 6: Top Changes with Form 5500 Plan Investment Information Suggested by Survey Respondents in our Two-Phase 

Survey Panel 

Potential change Very positive Very Negative

Number of 

responses

Percent of 

respondents 

indicating 

“very 

positive” 

Average 

score

Revise Schedule H (Financial Information) plan 

asset categories to better match current 

investment vehicles

a

18 0 31 58.1% 1.42

Add more internal consistency checks of Form 

5500b 15data

0 30 50.0% 1.20

Department of Labor provides a central 

repository for Employer Identification Numbers 

(EIN)/Plan Numbers

13 1 31 41.9% 1.13

Provide further clarification on when to use fair

value vs. contract value on the Schedules H 

and I (Financial Information-Small Plan) for 

synthetic guaranteed investment contracts or 

stable value products

12 1 31 38.7% 1.07

Clarify if a “contract administrator” referred to in 

Schedule H income and expense statement 

(line 2i(2)) includes record keepers

6 0 31 19.4% 1.07

Appendix II: Selected Results for Suggested 

Changes to Plan Investment and Service 

Provider Fee Information from the Phase 2 

Survey of our Two-phase Form 5500 

Stakeholder Panel
Appendix II: Selected Results for Suggested 

Changes to Plan Investment and Service 

Provider Fee Information from the Phase 2 

Survey of our Two-phase Form 5500 

Stakeholder Panel

Page 49 GAO-14-441 (Form 5500) 

Potential change Very positive Very Negative

Number of 

responses

Percent of 

respondents 

indicating 

“very 

positive” 

Average 

score

Standardize Schedule H, line 4i plan assets 

attachment and make it machine-readable

a

16 3 31 51.6% 1.00

Indicate which investment is the plan’s default 

investment option

13 1 30 43.3% 0.97

Create a field that discloses a single dollar 

amount for all the money being paid from plan 

assets for admin/revenue share

12 4 29 41.4% 0.79

Require reporting of mutual fund share classes 

on the Schedule H, line 4i plan assets 

attachment

10 5 30 33.3% 0.47

Require reporting of information on the top three 

service providers to the plan on Schedule I

10 5 30 33.3% 0.37

Source: GAO analysis of survey responses from GAO’s two-phase Form 5500 stakeholders panel.

Note: The table shows plan investment challenges for which 10 or more panelists indicated it was a 

“very positive” or an average score greater than 1.0.

a

average score is based on assigning +2 points to a “very positive” answer, +1 to a “somewhat 

positive” answer, 0 to a “neutral” answer, -1 to a “somewhat negative” answer, -2 to a “very negative” 

answer, and 0 to a “no basis to judge” answer.

b

Form 5500 is the annual report that employee benefit plans file with the federal government.

For service provider fee changes, we specifically asked: How much of a 

positive or negative impact (please consider costs, resources, burden, 

and benefit) for your (and your clients’) work would each of the following 

potential changes to Form 5500 have on the overall clarity, efficiency, or 

usefulness of service provider and fee information? Table 7 lists the top 

service provider fee potential changes indicated by survey respondents.
Appendix II: Selected Results for Suggested 

Changes to Plan Investment and Service 

Provider Fee Information from the Phase 2 

Survey of our Two-phase Form 5500 

Stakeholder Panel

Page 50 GAO-14-441 (Form 5500) 

Table 7: Top Service Provider Fee Changes Suggested by Survey Respondents in our Two-Phase Survey Panel

Potential change Very positive Very Negative

Number of 

responses

Percent of 

respondents 

indicating 

“very 

positive” 

Average 

score

Clarify Schedule C (Service Provider 

Information) instructions so that plan fees are 

reported more consistently

a

22 0 31 71.0% 1.61

Improve instructions for direct compensation, 

eligible indirect, and reportable indirect 

compensation

19 0 31 61.3% 1.39

Coordinate the service provider compensation 

information on Schedule C with the 408(b)(2) 

fee disclosure requirementsb

16

so plan sponsors 

do not have to provide two different sets of 

information on plan fees

1 31 51.6% 1.23

Reduce and simplify the number of service 

codes and add definitions behind them

13 0 29 44.8% 1.17

Improve consistency between DOL’s definition 

of direct compensation and generally accepted 

accounting principles

14 0 31 45.2% 1.16

Eliminate the distinction between eligible and 

reportable indirect compensations on Schedule 

C 

13 3 30 43.3% 0.77

Align Schedules H (Financial Information) and I 

(Financial Information-Small Plan) with new fee 

disclosure rules to determine if they capture all 

fees possible. The schedules should indicate 

whether all fees are disclosed or whether some 

fees are embedded

10 1 31 32.3% 0.77

Department of Labor should maintain a list of 

unique company identifiers (e.g. Employer 

Identification Number) for commonly used 

service providers for easy reference for 

preparers

10 2 30 33.3% 0.77

Include all individuals and companies who 

receive compensation for services provided to 

the plan in the Form 5500b without exceptions 

or exemptions

11 9 31 35.5% 0.10

Require plans to attach the 408 (b)(2) fee 

disclosures to their Form 5500s

11 c 9 31 35.5% 0.10

Eliminate Sch. C Part I line 3 (Indirect 

compensation)

10 12 31 32.3% -0.13

Source: GAO analysis of survey responses from GAO’s two-phase Form 5500 stakeholders panel.

Note: Table shows service provider challenges for which 10 or more panelists indicated it was a “very 

positive” or an average score greater than 1.0.
Appendix II: Selected Results for Suggested 

Changes to Plan Investment and Service 

Provider Fee Information from the Phase 2 

Survey of our Two-phase Form 5500 

Stakeholder Panel

Page 51 GAO-14-441 (Form 5500) 

a

average score is based on assigning +2 points to a “very positive” answer, +1 to a “somewhat 

positive” answer, 0 to a “neutral” answer, -1 to a “somewhat negative” answer, -2 to a “very negative” 

answer, and 0 to a “no basis to judge” answer.

b

Certain service providers are required to disclose fee information to plan fiduciaries of defined benefit 

and defined contribution pension plans to satisfy disclosure requirements under Title I of ERISA. See 

29 U.S.C. § 1108(b)(2) and 29 C.F.R. § 2550.408b-2.

c

Form 5500 is the annual report that employee benefit plans file with the federal government.
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 52 GAO-14-441 (Form 5500) 

Figure 2: Form 5500 Annual Return/Report of Employee Benefit Plan (2013)

Appendix III: 2013 Form 5500 and Select 

Schedules
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 53 GAO-14-441 (Form 5500) 

Source: http://www.dol.gov/ebsa/5500main.html
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 54 GAO-14-441 (Form 5500) 

Figure 3: Schedule C - Service Provider Information (2013)
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 55 GAO-14-441 (Form 5500) 
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 56 GAO-14-441 (Form 5500) 
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 57 GAO-14-441 (Form 5500) 
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 58 GAO-14-441 (Form 5500) 
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 59 GAO-14-441 (Form 5500) 

Source: http://www.dol.gov/ebsa/5500main.html
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 60 GAO-14-441 (Form 5500) 

Figure 4: Schedule H – Financial Information (2013)
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 61 GAO-14-441 (Form 5500) 
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 62 GAO-14-441 (Form 5500) 
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 63 GAO-14-441 (Form 5500) 

Source: http://www.dol.gov/ebsa/5500main.html
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 64 GAO-14-441 (Form 5500) 

Figure 5: Schedule I – Financial Information – Small Plan
Appendix III: 2013 Form 5500 and Select 

Schedules

Page 65 GAO-14-441 (Form 5500) 

Source: http://www.dol.gov/ebsa/5500main.html
Appendix IV: Comments from

Department of Labor

Page 66 GAO-14-441 (Form 5500) 

Appendix IV: Comments from

Department of Labor
Appendix IV: Comments from

Department of Labor

Page 67 GAO-14-441 (Form 5500) 
Appendix IV: Comments from

Department of Labor

Page 68 GAO-14-441 (Form 5500) 
Appendix V: Comments from Department of 

Treasury/Internal Revenue Service

Page 69 GAO-14-441 (Form 5500) 

Appendix V: Comments from Department of 

Treasury/Internal Revenue Service
Appendix V: Comments from Department of 

Treasury/Internal Revenue Service

Page 70 GAO-14-441 (Form 5500) 
Appendix V: Comments from Department of 

Treasury/Internal Revenue Service

Page 71 GAO-14-441 (Form 5500) 
Appendix V: Comments from Department of 

Treasury/Internal Revenue Service

Page 72 GAO-14-441 (Form 5500) 
Appendix VI: Comments from the

Pension Benefit Guaranty Corporation

Page 73 GAO-14-441 (Form 5500) 

Appendix VI: Comments from the

Pension Benefit Guaranty Corporation
Appendix VI: Comments from the

Pension Benefit Guaranty Corporation

Page 74 GAO-14-441 (Form 5500) 
Appendix VI: Comments from the

Pension Benefit Guaranty Corporation

Page 75 GAO-14-441 (Form 5500) 
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 76 GAO-14-441 (Form 5500) 

Charles A. Jeszeck, Director, (202) 512-7215 or jeszeckc@gao.gov. 

In addition to the contact named above, David Lehrer (Assistant Director), 

Suzanna Clark, Carl Ramirez, Ryan Siegel, Michael Silver, Salvatore 

Sorbello, and Amber Yancey-Carroll made key contributions to this report. 

Also contributing to this report were Amy Bowser, Holly Dye, Kathy Leslie, 

Kristine Hassinger, Sheila McCoy, Jonathan McMurray, Libby Mixon, 

Mimi Nguyen, Jason Palmer, Roger Thomas, Robyn Trotter, Craig 

Winslow, and Jill Yost.

Appendix VII: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments
Related GAO products

Page 77 GAO-14-441 (Form 5500) 

Private Pensions: Clarity of Required Reports and Disclosures Could Be 

Improved. GAO-14-92. Washington, D.C.: November 21, 2013. 

Private Pensions: Revised Electronic Disclosure Rules Could Clarify Use 

and Better Protect Participant Choice. GAO-13-594. Washington, D.C.: 

September 13, 2013.

Private Sector Pensions: Federal Agencies Should Collect Data and 

Coordinate Oversight of Multiple Employer Plans. GAO-12-665. 

Washington, D.C.: September 13, 2012.

401(k) Plans: Increased Educational Outreach and Broader Oversight 

May Help Reduce Plan Fees. GAO-12-325. Washington, D.C.: April 24, 

2012.

E-Filing Tax Returns: Penalty Authority and Digitizing More Paper Return 

Data Could Increase Benefits. GAO-12-33. Washington, D.C.: October 5, 

2011.

401(k) Plans: Improved Regulation Could Better Protect Participants from 

Conflicts of Interest. GAO-11-119. Washington, D.C.: January 28, 2011.

Private Pensions: Additional Changes Could Improve Employee Benefit 

Plan Financial Reporting. GAO-10-54. Washington, D.C.: November 5, 

2009.

Private Pensions: Government Actions Could Improve the Timeliness and 

Content of Form 5500 Pension Information. GAO-05-491. Washington, 

D.C.: June 3, 2005.

Related GAO products

(131221)
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