Proposed Form 5500 Revision to Include Inquiry into Erisa §411 Compliance

John R. Harney and Kathleen Bichner, O'Donoghue & O'Donoghue LLP

On July 21, 2016, the Departments of Labor and Treasury and the Pension Benefit Guaranty Corporation ("the Agencies") issued a proposed revision of Form 5500.1 Among the proposed revisions, the Agencies have sought to include the following question to Schedule H of the Form 5500:

Did any person who is disqualified under ERISA Section 411, serve or was permitted to serve the plan in any capacity?

The Agencies proposed the question because of recent DOL investigative activity and in an effort to "facilitate competent plan administration and improve due diligence by encouraging the plan administrator to determine whether any of the plan's fiduciaries, employees, and service providers potentially participated in an act prohibited by ERISA Section 411." 81 Fed. Reg. 47562 (July 21, 2016). This article outlines the provisions of ERISA §411 and the administrative procedures plans may take to comply with this section of ERISA.

Adopted from similar disqualification provisions for officers of labor unions in the Labor Management Reporting and Disclosure Act of 1959 ("LMRDA"), ERISA §411 disqualifies people who have been convicted of certain crimes2 from serving as an administrator, fiduciary, officer, trustee, custodian, counsel, agent, employee, consultant, or adviser of any employee benefit plan for a period of typically 13 years after the later of the conviction or the end of imprisonment for the crime. A person convicted of one of the enumerated crimes under ERISA §411 may seek a lesser period of disqualification of no less than 3 years if the court determines their continued service in any of the capacities to an employee benefit plan is not contrary to the purposes of ERISA's fiduciary provisions. Where the criminal conviction applies to a corporation or partnership, the court hearing the criminal case must, after notice and a hearing, make a determination that service by the corporation or partnership to an employee benefit plan is not inconsistent with the intentions of ERISA §411.

Some plans have required all employees and service providers to provide certifications that they have not been found guilty of any of the enumerated crimes found in ERISA §411 and agree to notify the Funds if later convicted of a crime. While similar certifications will allow plans to meet the requirements of the revised Form 5500, the certification should include additional information to allow corporations and partnerships with criminal convictions to provide plan fiduciaries with documentation that the criminal court has determined that the corporation's or partnership's continued work with an ERISA plan is not inconsistent with the intentions of ERISA §411.

Comments on the proposed revisions to Form 5500 closed on December 5, 2016. It is unclear at this point if the current Administration will ultimately issue a new revised Form 5500, which will include ERISA §411 reporting. In the meantime, plan fiduciaries may wish to continue to require all service providers and new employees to complete the ERISA §411 Certifications as a way to facilitate competent plan management and meet their fiduciary obligation of due diligence.


The proposed revisions to the Form 5500 by the Agencies seek to improve reporting for filers and the public by: (1) Modernizing financial information filed regarding plans; (2) updating fee and expense information on plan service providers, with a focus on harmonizing annual reporting requirements with the DOL's final disclosure requirements at 29 CFR 2550.408b-2; (3) enhancing mineability of data filed on annual return/reports; (4) requiring reporting by all group health plans covered by Title I of ERISA, including adding a new Schedule J (Group Health Plan Information); and (5) improving compliance under ERISA and the Code through selected new questions regarding plan operations, service provider relationships, and financial management of the plan. 81 Fed. Reg. at 47538 (July 21, 2016).

The ERISA § 411 Crimes include robbery, bribery, extortion, embezzlement, fraud, grand larceny, burglary, arson, a felony violation of Federal or State law involving substances defined in section 802(6) of title 21 (illicit narcotics), murder, rape, kidnaping, perjury, assault with intent to kill, any crime described in section 80a–9(a)(1) of title 15 (illegal securities exchange), a violation of any provision of this chapter, a violation of section 186 of this title (Taft-Hartley), a violation of chapter 63 of title 18 (mail and other frauds), a violation of section 874 (kickbacks from public works), 1027 (falsehood in ERISA document), 1503 (threats to juror or court), 1505 (obstruction of legal proceedings), 1506 (record theft or alteration), 1510 (obstruction of criminal investigation), 1951 (robbery or extortion affecting commerce), or 1954 (employee benefit plan corruption) of title 18, a violation of the Labor-Management Reporting and Disclosure Act of 1959 (29 U.S.C. 401), any felony involving abuse or misuse of such person's position or employment in a labor organization or employee benefit plan to seek or obtain an illegal gain at the expense of the members of the labor organization or the beneficiaries of the employee benefit plan, or conspiracy to commit any such crimes or attempt to commit any such crimes, or a crime in which any of the foregoing crimes is an element. 29 U.S.C. §1111.