March 2010, Focus: Human Resources
When logging in is no longer an option, the time is now
Small businesses differ from larger ones in a variety of ways, some noticeable, some more subtle. If you’re part of a larger business, you’ve probably been online for years, and it’s become a standard method of communication.
If you’re part of a smaller business, things may be more than a little different. You might not have company wide email or the need for a server. Depending on your geography, your only onramp to the internet could be via dialup because nothing speedier is available.
But this is the year where a little governmental nudge will change things for you.
“It’s hard to say how much filing and reporting is being done online, but with the amount of filing businesses are required to do to federal, state and local agencies, there has been a significant increase,” says Mark Aulik, senior benefits manager for Baker Tilly in Madison. “During the past few years, there has been a definite trend toward online reporting.”
Part of this is due to our growing comfort level with completing paperwork online. But we can also thank the folks in Washington, D.C., for passing legislation that takes more things into the online arena.
“There have been a number of initiatives — the Paperwork Reduction Act, the E-Government Act of 2002 and now the Pension Protection Act of 2006 — that have been passed to improve efficiency and reduce the amount of governmental paperwork,” says Aulik. “The latest one, the Pension Protection Act, has led to a requirement that Form 5500 must be filed electronically.”
This should not come as a surprise. After this particular bill was passed into law, the Department of Labor began writing its regulations. During that time, filing online was optional.
Effective Jan. 1, 2010, all Form 5500 Annual Returns/Reports of Employee Benefit Plan and all Form 5500-SF Short Form Annual Returns/Reports of Small Employee Benefit Plan for 2009 and 2010 plan years, and any required schedules and attachments, must be completed and filed electronically using EFAST2-approved third-party software or using iFile. According to the Department of Labor, a limited exception is available, however, for delinquent and amended 2008 plan year filings.
“Submitting electronically means that businesses must have both an email account and internet access,” says Aulik.
But he cautions what might have the most impact on a small business it not the account access, but how the business accesses the World Wide Web and internet.
“Getting in to the government Web site can take time, even if you have broadband or fast access,” he notes. “Every business in America will be logging in, which can really be a drag on the system.”
Aulik notes that his firm recently e-filed forms with the Centers for Medicare & Medicaid Services.
“We had information for about a dozen employees and it took close to a week to get the information filed because the system was so slow,” he says. “A similar situation is likely to happen here, too.”
There is some good news in this reporting change.
“One of the upsides is that, as part of the Pension Protection Act, there’s now a simplified form that certain smaller businesses can use,” says Aulik. “That’s a big improvement; the last Form 5500 was nearly a half-inch thick.”
The bother of having to send in your company’s Form 5500 via certified mail with a return receipt to ensure its delivery is also gone.
“When you file electronically, you receive a confirmation right away,” he says, not to mention the savings of about ten dollars in fees at the post office.
The e-file requirement is something your company does not want to ignore. The only way to report is online, and failing to do so is a failure to report, which can carry a $15,000 penalty.
And as a last note, trying to do things via snail mail won’t work either.
“It’s my understanding that the Department of Labor has actually discontinued the old mailboxes, so if you try to mail the form in, it will be returned to you,” says Aulik.
Laurie Arendt is editor of CRW. She can be reached at crweditor@crwmag.com