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Employee Benefits Security Administration

Peer Review Of Form 5500 Forms Revisions Regulation

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Andrew McWilliam, Ph.D.
Economist, U.S. Food and Drug Administration
5600 Fishers Lane, Rockville, MD
November 20, 2005

Are the plan universe estimates sufficiently detailed and otherwise adequate to their purpose of estimating and characterizing burdens?
The new estimates are based upon 1999 Mathematica Policy Research survey estimates updated to reflect changes in both the number of filers of different forms and in the forms themselves. The method by which the estimates are derived is very detailed and, given the available information, seems appropriate.


Unit costs were estimated based on previous estimates of the burden of reporting requirements implemented for plan year 1999. In light of that basis, and considering the method by which the current estimates were inferred from it, are the estimates sufficiently reliable and detailed and otherwise adequate to their purpose of estimating and characterizing burdens?
The burden estimates are based on surveys of service providers conducted prior to 1999, and are older than would be ideal. It would be easy to imagine a trend in underlying tax preparer costs which would cause estimates from 1999 to differ from results a similar survey of tax preparer costs might show today, though adjustments in the rate at which dollars are converted to hours should, to some extent, control for changes when the estimated burden is measured in hours. Given that more recent survey data is not available, I do not know of any empirical trend which would bias the older estimates.

While changes in the underlying costs of filling out forms may affect whether the estimated burden, in aggregate, is too high or too low in absolute terms, the latest form changes should reduce the burden relative to the previous forms, and I think it is unlikely that updated survey estimates would affect this result.


Are the methods employed in the spreadsheet model to generate burden estimates based on the plan universe and unit cost estimates sound?
The changes in burden estimates result from the elimination of some forms, and the availability of new forms for some filers. New forms are, on average, less burdensome, so that when the model adds up the number of each kind of filer and the burden they will now spend, the aggregate burden is less. The methodology seems sound.


Based on the foregoing, what level of confidence would you place in the burden estimates themselves?
The aggregate burden, measured in either hours or dollars, seems plausible, and I have no basis for thinking it is too high or too low. If I had to arbitrarily put confidence intervals around the aggregate estimates, they would be wide: an actual burden 50% higher or lower would not surprise me at all.

The model also estimates that the proposed forms will reduce the burden relative to the old forms. Based on my review of the materials provided, I believe this result is sound.