Form 5500 as the Eye in The Sky

“In Vegas, everybody’s gotta watch everybody else. Since the players are looking to beat the casino, the dealers are watching the players. The box men are watching the dealers. The floor men are watching the box men. The pit bosses are watching the floor men. The shift bosses are watching the pit bosses. The casino manager is watching the shift bosses. I’m watching the casino manager. And the eye-in-the-sky is watching us all.” –Casino (1995)

Retirement plans don’t have that much oversight, but the fact is that what plan sponsors do with their plan is open to the public since the Form 5500 that every ERISA based retirement plan has to file is publicly available. Folks like will rate a plan sponsor’s plan based on that information.

There is a lot reported on a Form 5500 and potential plan providers can use that information to gauge whether the plan should be a target for recruitment. That information can also fall into other hands that a plan sponsor wouldn’t want for them to see, such as the government and ERISA litigators.

Much like a resume, a 5500 is littered with information that is certainly ripe for discussion, so that’s why plan sponsors should be vigilant about their retirement plan to make sure that damaging information can’t be divulged by making sure the bad stuff doesn’t take place.

A law professor from Yale sent 6,000 letters in a disjointed way to plan sponsors claiming that their fees were high and that information would be posted on Twitter. Plan sponsors and their advisors were outraged, but that’s what happens when a Form 5500 is publicly available.

So plan sponsors may not have an eye in the sky watching them, but a Form 5500 can be proof that something might be wrong with a plan sponsor’s plan.

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