Statute of limitations if plan assets < $100k
Posted 29 July 2007 - 08:57 AM
However, what if there is no requirement to file as assets are <$100k?
When is the start date, what is the statute of limitations, if any?
I can't believe it would never start, as then it would be extremely (unnecessarily) risky to follow the advise not to file if assets <$100k?
Thanks for your insights.
Posted 29 July 2007 - 04:21 PM
Posted 29 July 2007 - 05:13 PM
I hope my question is clear?
I dont understand why a taxpayer would want to file a 5500 for s/l purposes if 5500 is not required. Please explain.
Edited by helpmewithtaxes, 29 July 2007 - 05:16 PM.
Posted 30 July 2007 - 11:56 AM
Posted 30 July 2007 - 04:33 PM
If plan assets are less than 100k the IRS will not accept a 5500-ez filing.
This statement was surprising to me. Are you sure? Are such filings just not processed, shredded, or what?
Posted 30 July 2007 - 04:58 PM
Posted 30 July 2007 - 05:30 PM
On one or two occasions, we have received a letter from the IRS noting that the filing may not be required due to the amount of the assets but they have never returned the filing.
We have a plan that currently has less than $100,000 in assets but in a prior year had more than $100,000 in assets and is, therefore, required to file the 5500-EZ. Unless they track the past history of this plan, the IRS would not know if the filing was required or not.
Posted 30 July 2007 - 05:50 PM
Posted 30 July 2007 - 09:03 PM
Posted 31 July 2007 - 10:15 AM
Will you please explain the benefits of filing a return for which no filing is required, other than that the s/l may expire for the information listed on the return.
In the situations I am familiar with, the filings were not made because of any particular benefit that might have been reaped. Several years ago, some felt there was ambiguity (which has more recently been clarified) about the necessity to file a Schedule B, even if plan assets were below the threshhold. The parties involved took the conservative approach of filing because of that uncertainty.
Posted 31 July 2007 - 11:15 AM
Posted 31 July 2007 - 11:48 AM
Since the IRS had, in Announcement 80-45, stated that a Schedule P could only be filed as an attachment to a 5500 form, some practitioners had their clients file a 5500EZ even when not required just to add an extra layer of protection in the event of plan disqualification.
Posted 31 July 2007 - 11:52 AM
I wasn't aware that there was any ambiguity
The 1996 instructions for the Schedule B added the following phrase:
"The Schedule B does not have to be filed if Form 5500-EZ is not required to be filed (in accordance with the instructions for Form 5500-EZ);"
Since such phrasing did not exist in the 1995 instructions, I would propose that there was some reason the IRS felt it important to clarify this matter.
Edited by WDIK, 31 July 2007 - 11:54 AM.
Posted 31 July 2007 - 10:24 PM
But the REAL reason that some practitioners advised filing in this circumstance is that by filing a Schedule P, a 3-year S/L applies to the income on an exempt trust. This would be all trust income, not just UBTI. If the IRS were to disqualify a plan retroactively, the 3 year S/L could be a big deal.
So it would be useful to file, to protect the interest and realized capital gains incurred in the year, in case of later retroactive disqualification?
Also, is there any statue of limitations for operational problems (e.g. amount of contribution, timing of contributions)? In the case I have in mind it's a 1-person plan from Fidelity with a "canned" document which I assume has no problems as Fidelity presumably had good lawyers if the plan be used by 1000's of self-employed; and I'm not aware of any failures, but could it be that...
The IRS comes along in 2027, determines that contributions in 2007 were made too early (like before salary was paid or work perfomed)/too late (just as example), or something was not in accordance with the +-30page fineprint plan document, disqualifies plan or the contributions in question, penalties, back taxes, 6-8% interest p.a., could easily be a multiple of plan assets. Would kinda defeat the purpose of a retirement plan.
Is there any risk limitation in case you overlooked a regulation?
Edited by helpmewithtaxes, 31 July 2007 - 10:28 PM.
Posted 01 August 2007 - 08:25 AM
I'll report back on whatever I hear.
Posted 01 August 2007 - 10:48 AM
Edited by mjb, 01 August 2007 - 11:48 AM.