Why Use 5500
The federal Employee Retirement Income Security Act sets minimum standards for workplace benefit plans such as pensions, health plans and 401(k) accounts. The U.S. Department of Labor oversees ERISA-covered plans, which have to submit an annual report to the department. The 5500 is designed to serve a double purpose. It provides financial information to the IRS but plans and DREs also can use it to meet the DOL's annual reporting requirements.
The Master Trust
A master trust investment account is an example of a DRE. One kind of master trust holds the assets of several different plans, all sponsored by a single employer. The other type holds plan assets from a single group of employers under common control. A bank or other regulated financial institution, not a securities broker, has to serve as the trust's asset custodian. A master trust may hold several investment accounts. The administrator of the benefit plan has to file a 5500 for every master trust investment account the plan participates in.
A common/collective trust is an investment arrangement maintained by a bank or similar company. A pooled separate account is an arrangement run by an insurance firm. CCTs and PSAs don't have to file a 5500, but they can choose to do so. Any DFE investment arrangement that isn't a CCT or PSA is a 103-12 investment entity. Filing is optional for these entities, too.The last type of DFE is a group insurance arrangement, an insurance plan that provides benefits to workers at two or more unaffiliated employers. A GIA does have to file a 5500.
What They File
DFEs that file the basic Form 5500, also have to file the 5500 Schedule D. A DFE uses Schedule D to list all the benefit plans that invest with the entity, and the company sponsoring each plan. If the DFE invests money with other DFEs, it lists the other entities and the amount it has invested in them. If a CCT, PSA or 103-12 chooses to file a Form 5500, this reduces the amount of paperwork the plans investing with them have to file.