Podcast Center
Video Center
Webcasts
Resource Center
Events
February 04, 2010 at 07:00 PM
The Employee Benefits Security Administration has issued a new batch of advice that will affect how insurers, benefit plan administrators and benefit plan sponsors go about calculating 2009 “reportable compensation.”
EBSA, an arm of the U.S. Department of Labor, has published new interpretations of the reportable compensation calculation rules in a list of answers to 27 frequently asked Form 5500 questions.
Form 5500 is the form that benefit plans use to report on their activities to the Internal Revenue Service and the Labor Department.
Schedule C gives the IRS and the Labor Department information about a plan’s administrative costs.
Federal agencies are requiring more detailed descriptions of administrative costs. The agencies want to encourage sponsors to run plans as efficiently as possible, officials say.
One question deals with the costs and expenses incurred by an insurance company in connection with a general account investment contract that promises a guaranteed rate of return.
“The answer generally depends on whether plan services are included as part of the investment contract,” officials say.
If, for example a stablue value contracts includes recordkeeping services, trusteeship services and similar services, and the insurer reduces the crediting rate on the contract to cover the cost of providing those services, then that indirect charge would have to be reported as service provider compensation, officials say.
If the investment investment contract is not combined with any plan services, then the insurer is not receiving any reportable compensation, officials say.
“Payment of commissions and other compensation to agents, brokers and other persons in connection with the placement or retention of the insurance contract would, however, be reportable compensation to the recipients, regardless of how they are characterized,” officials say.
