tgraham

Single-Participant 401(k) Plan - 5500 Filing

10 posts in this topic

Is it correct that a Single-Participant 401(k) Plan does not have to file a Form 5500, until plan assets exceed $100,000? Also, is it ok for the investment advisor to use a "regular" 401k prototype plan document for a Single-Participant 401(k) Plan or does the plan document have to be specifically tailored for this type of plan? Thank you for your help.

Share this post


Link to post
Share on other sites

You are correct. There is no tailoring.

Share this post


Link to post
Share on other sites

Yes, in the case of a single participant plan, if the assets are less than $100K (including receivables) there is no filing requirement.... No EZ needed.

A Solo K plan is in actuality a regular qualified plan and enjoys all the benefits under ERISA.... no difference in the kind of doc. I use my regular doc and simply tailer the choices to the client's desires (eligibility, vesting, etc.). Maybe some larger institutions spent the $ to create a specific document for the Solo client... Not necessary though.

I do stress to the client that once an employee is hired, that employee is eligible to be apart of the plan just like the sponsor. As long as the eligibility requirements are met by any employee, that qualifying employee must be allowed to enter the plan... cannot discriminate.

Share this post


Link to post
Share on other sites

There are some differences between a 1-participant plan and a multi-participant plan...e.g. blackout notice requirement, fidelity bonding requirement, bankruptcy protection, etc.

Also, you may need to file a 5500 or 5500-EZ even if the plan assets are less than $100,000 -- for example, if it is the final plan year, or if the employer is a member of a controlled group.

Share this post


Link to post
Share on other sites

You may also need to file if the assets are less than $100,000 for te one person 401(k) plan but you maintain another plan and the total assets of both plans are $100,000 or more. For example, where the sponsor has both a defined benefit plan and a one person 401(k) for deferral only purposes.

Share this post


Link to post
Share on other sites

Assuming you're exempt from filing (and the employer squeeks when they walk); a way to delay hitting the $100,000 threshold is to deposit only salary deferrals to the 401K and the employer discretionary to a SEP. Anybody see a rpoblem with this?

Share this post


Link to post
Share on other sites
Assuming you're exempt from filing (and the employer squeeks when they walk); a way to delay hitting the $100,000 threshold is to deposit only salary deferrals to the 401K and the employer discretionary to a SEP. Anybody see a rpoblem with this?

No. Providing the SEP is a prototype or individually designed SEP .

A 5305-SEP cannot be used in tandem with another plan

Share this post


Link to post
Share on other sites

because you can't have a SEP (IRA SEP, 5305-SEP) along with a qualified plan and contribute to both... correct? But then what is a prototype SEP... a qualified plan?.. and dont your combine all assets of all qualified plans in determing wether you need to file? What am I missing ??

Edited by PATA

Share this post


Link to post
Share on other sites

Right- an employer cannot maintain (contribute to) a 5305-SEP while maintaining a qualified plan.

By definition, a prototype SEP is not a qualified plan --- as you know, qualified plans are defined under 401(a), while a SEP is defined under 408(k)…

Generally, SEPs are exempted from filing 5500

Share this post


Link to post
Share on other sites

You cannot have a qualified plan paired with a SEP using a 5305-SEP.

You can have a qualified plan paired with a SEP if the SEP document is a prototype SEP. Contributions (within limitations) can be made to both under this scenario.

An approved IRA custodian/trustee may submit it's own SEP IRA document to the IRS for approval. It's still a SEP IRA - it does not become a qualified plan merely because it was individually approved by the IRS.

You do not aggregate the market value of the SEP IRA with the qualified plan for purposes of determining asset values for the 5500 reporting threshold.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now