Using Desktop Software Under EFAST2

EFAST2 Part 8 

In our continuing series of FAQs on EFAST2, we are addressing the issues and procedures with which Form 5500 preparers and plan sponsors will need to familiarize themselves to make the transition to electronic filing.

Over the past couple of decades, desktop software has become the primary method for preparing 5500s. Under EFAST2, desktop software will play an essential role in complying with the mandatory electronic filing requirement. Preparers will need to understand the options that are available to them for transmitting the 5500s to the DOL. Because of the restrictions the DOL has placed on sharing credentials, preparers generally will need to rely on third party web-based systems to transmit the 5500s to the DOL. The following FAQs address the issues regarding preparing and transmitting 5500s with desktop software.

Under EFAST2, how may a 5500 preparer use desktop software to prepare a Form 5500 (and schedules)?

EFAST2 provides five options for using desktop software to prepare a 5500 and schedules:

  1. The preparer may prepare the 5500 using desktop software and then transmit the 5500 to the DOL directly over the internet.
  2. The preparer may use the desktop software to prepare the 5500 and then publish it to a third-party web-based program. The TPA or the client then will transmit the 5500 over the internet to the DOL.
  3. The preparer may use the desktop software to prepare the 5500 and then export the file to an XML file. The preparer then will email the file to the employer who will upload the file to IFILE and transmit to the DOL.
  4. The preparer may use the desktop software to prepare the 5500 and then save it to a PDF format. The preparer then will email it to the client who will input the information on IFILE and transmit the filing to the DOL.
  5. A preparer that prepares certain schedules (e.g., Schedules SB or MB) may use desktop software to prepare a schedule and then export the schedule to an XML file and email to another preparer who then will import the file, and transmit using one of the previous methods.

May a third party administrator (TPA) use desktop software to prepare and to transmit the 5500 directly to the DOL?

Effectively no. Since the DOL restricts the employer from sharing its signing credential with the TPA, the TPA may not prepare and transmit the 5500 directly to the DOL with desktop software.

Who can use desktop software to both prepare and transmit a 5500 to the DOL?

An employer that prepares its own 5500 can use desktop software both to prepare and transmit the 5500 because it can electronically sign the 5500 without sharing its credentials.

Example. Corporation X maintains a large 401(k) plan and a health insurance plan. X’s accounting department prepares the 5500s for the two plans on desktop software. X will need to have the corporate officer who will sign the 5500 obtain filing signer credentials. The accounting department also will need to obtain transmitter credentials. After completion of the 5500s, the accounting department can have the corporate officer enter his/her signer ID and pin code. The accounting department then will transmit the 5500s directly over the internet to the DOL.

How does a TPA who has prepared a 5500 on desktop software transmit the 5500 to the DOL?

The TPA can prepare the 5500 on the desktop software and then publish it to a third party web-based program. The TPA then would invite the employer over the internet to a signing ceremony where the employer would enter its signing credentials and transmit the 5500 to the DOL.

May the TPA prepare the 5500 on desktop software and transmit it to its client for submission to the DOL?

Yes. The TPA could prepare the 5500 on desktop software and then export an XML file, and e-mail (or otherwise provide) the file to the client for filing under IFILE.

If a TPA e-mails the 5500 to the client, what steps would the client need to take in order to transmit the filing to the DOL?

In order for the TPA to prepare the 5500 on desktop software and then have the client transmit it to the DOL, the TPA and the client would need to complete the following steps subsequent to preparation of the 5500:

  1. The TPA would need to:
    1. export the 5500 (and schedules) to an XML file.
    2. attach the XML file to an email and send the email to the client.
    3. create attachments (if any) in text or PDF format and email them to the client. Note: some desktop software programs will bind the attachments to the filing in the XML file.
    4. forward the audit (if required) to the client. Note: In some circumstances, the accountant will send the audit directly to the client.
    1. The client would need to:
      1. obtain filing author and filing signer credentials.
      2. create a 5500 filing under IFILE.
      3. import the XML file to IFILE.attach the attachment (if required) in the appropriate place. Note: 51 possible attachments exist under EFAST2. Also, some desktop software providers do not accommodate attachments. In that case, the TPA would need to provide the information to the client who would need to input the information on IFILE.
      4. attach the audit (if required) to the filing. Note: If the accountant provides a paper copy of the audit, the client will need to scan the audit to a PDF format and attach the audit to the filing.
      5. enter filing signer credentials.
      6. transmit the filing to the DOL.
      7. determine if the filing is processable.
      8. check the filing status.
      9. make the appropriate amendments and refile with the DOL if the client receives a filing status of filing stopped or filing error.
      10. determine if the DOL provided a warning with a filing received status, and if so, take appropriate steps.

      Comment: Preparing the 5500 filing on desktop software and providing it to the client to file under IFILE will require: (1) the TPA to provide a fair amount of instruction to the client; (2) the client to have good computer skills; and (3) the client to develop a familiarity with the IFILE process.

      If a TPA published the 5500 to a third party web-based system, what steps would the TPA need to take in order to transmit the filing to the DOL?

      In order for the TPA to prepare a 5500 on desktop software and then use a third party web-based system to transmit it to the DOL, the TPA and the client would need to complete the following steps subsequent to preparation of the 5500:

      1. The TPA would need to:
        1. publish the 5500 (and schedules) to the web-based system.
        2. attach the audit and any attachments (if required) to the filing. Note: If the accountant provides a paper copy of the audit, the TPA will need to scan the audit and attach the audit to the filing.
        3. invite the client to a signing ceremony by way of an email.
        4. determine if the filing is processable after filing transmitted to the DOL.
        5. check the filing status. Note: Some web-based systems will provide an email to the TPA indicating the filing status.
        6. make the appropriate amendments and refile if the filing status is filing stopped or filing error.
        7. determine if the DOL provided a warning with a filing received status, and if so, the TPA would need to take appropriate steps.
        1. The client would need to:
          1. Enter the filing signer credentials and click the filing submission button.

          If a TPA prepared the 5500 on desktop software and provided it to the client in PDF format, what steps would the TPA and the client need to take in order to prepare the filing on IFILE and transmit it to the DOL?

          In order for the TPA to prepare the 5500 on desktop software and provide it to the client in PDF format, the TPA and the client would need to complete the following steps to file the 5500 with the DOL:

          1. The TPA would need to:
            1. prepare the 5500 (and schedules)
            2. save the filing in PDF format.
            3. create attachments (if any) in text or PDF format and email them to the client.
            4. forward the audit (if required) to the client. Note: In some circumstances, the accountant will forward the audit directly to the client.
            1. The client would need to:
              1. obtain filing author and filing signer and credentials.
              2. create a 5500 filing under IFILE.
              3. input the information from the PDF file to the filing on IFILE.
              4. Input the information on any attachments (if required) in the appropriate place. Note: 51 possible attachments exist under EFAST2. Also, some desktop software providers do not accommodate attachments. In that case, the TPA would need to provide the information to the client in another format.
              5. attach the audit (if required) to the filing. Note: If the accountant provides a paper copy of the audit, the client will need to scan the audit to a PDF format and attach the audit to the filing.
              6. enter filing signer credentials.
              7. transmit the filing to the DOL.
              8. determine if the filing is processable.
              9. check the filing status.
              10. make the appropriate amendments and refile with the DOL if the client receives a filing status of filing stopped or filing error.
              11. determine if the DOL provided a warning with a filing received status, and if so, take appropriate steps.

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