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EZ vs SF


ombskid

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We have been using the 5500EZ for single participant plans.

We are thinking of using the 5500SF now for these plans. Other than the obvious differences in filing, client's computer savvy etc, is there any compelling reason for using one vs the other?

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You will be providing more information, including SB, than is required. You will also answer "No" to questions such as fidelity bond which may look peculiar and trigger audit questions. Finally, the SF is available for public screening.

The material provided and the opinions expressed in this post are for general informational purposes only and should not be used or relied upon as the basis for any action or inaction. You should obtain appropriate tax, legal, or other professional advice.

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You will be providing more information, including SB, than is required. You will also answer "No" to questions such as fidelity bond which may look peculiar and trigger audit questions. Finally, the SF is available for public screening.

SB is not attached to 1 participant DB plans.

The question about Bonding is skipped on 1 part plans.

There is an abbreviated subset of questions you answer on the 1 part SF v EZ.

Supposedly the 1 part SF is not supposed to be on the DOL website but I don't know if that is true for sure or not.

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we use to have the client return a signed EZ to us and we would mail certified so there was proof of the filing.

now they sign the SF and return to us and we file electronically for them, so they don't even need computer savvy. and that isn't much different than what we have done in the past, except now we have immediate proof of filing.

agree with Lou - the form becomes very abbreviated once you select one person plan.

on FT William you can't even enter info even if you tried.

just tried a search on the DOL website for an "EZ" filed as an SF and nothing is found, so it looks like even that is working.

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From the instructions to the 5500 SF:

"Information filed on Form 5500-EZ is required to be made available to the public.

Form 5500-SF is open to public inspection and the contents are public
information subject to publication on the Internet. However, the information on Form 5500-SF will not be
subject to publication on the internet for a “one-participant plan” that is electronically filed using a Form 5500-SF with
EFAST2 in lieu of filing a Form 5500-EZ on paper with the IRS."

1st sentence - I thought the information on the EZ was NOT available to the public. The above would lead me to think LESS is potentially available to the public if the SF is filed.

Anyone else read it this way?

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  • 2 months later...

What if we have a one participant plan that has a controlled group? For instance, owns an S corp and has self employed income and both sponsor the plan - Is this still a 'one participant plan'? Can you still file an EZ or must you file a 5500-SF? Or doesn't the controlled group existence matter?

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I have a somewhat related situation. Doctor is the only one deferring to 401 (k) $17,500. + $5,500. Catch-up. Safe Harbor Match. No other Employee Deferrals. No Profit Sharing contribution, so doctor is the only Participant with an Account Balance. Three other Participants completed Salary Deferral Election Notices, declining participation in the Plan.

Previously in a somewhat similar situation I filed a 5500-SF showing 2 Participants with only 1 with an Account Balance. Plan was audited, I.R.S. made owner give a 3% Top Heavy Minimum to non deferring Participant even though that person also completed a Salary Election Deferral Notice declining participation in Plan.

Question- Based on above,would you indicate that Plan had 4 or 1 Participants? If 1, would you file a 5500-SF or 5500-EZ? If an EZ would you file at all since Plan assets only $23,000.67.

Any input would be greatly appreciated.

Thanks.

DPSRich

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Interesting question. a little research shows

Prior to 2009 (when e-fast 2 kicked in) the EZ instructions read (and definitely said you couldn't if a controlled group):

Who May File Form 5500-EZ
You may file Form 5500-EZ instead of Form 5500 if you meet all of the following conditions:
1. The plan is a one-participant plan. This means either:
a. The plan only covers you (or you and your spouse) and you (or you and your spouse) own the entire business. (The business may be incorporated or unincorporated); or
b. The plan only covers one or more partners (or partner(s) and spouse(s)) in a business partnership.
2. The plan meets the minimum coverage requirements of section 410(b) without being combined with any other plan you may have that covers other employees of your business. See the instructions for line 14c for more information.
3. The plan does not provide benefits for anyone except you, or you and your spouse, or one or more partners and their spouses.
4. The plan does not cover a business that is a member of:
a. An affiliated service group,
b. A controlled group of corporations, or
c. A group of businesses under common control.

5. The plan does not cover individuals of a business that uses leased employees. For an explanation of the technical terms above, see Definitions on page 3.
…………………………..
now the instructions (this is from the SF instruction on one participant plans)

Conditions for Filing. One-participant plan filers that meet the following conditions are eligible to file a Form 5500-SF.
1. The plan is a “one-participant plan.” This means either:
a. The plan only covers you (or you and your spouse) and you (or you and your spouse) own the entire business (which may be incorporated or unincorporated) or
b. The plan only covers one or more partners (or partner(s) and spouse(s)) in a business partnership.
2. The plan does not provide benefits for anyone except you, or you and your spouse, or one or more partners and their spouses.
3. The plan covered fewer than 100 participants at the beginning of the plan year.

.......................

It looks like the requirement "is not a member of a controlled group" no longer applies.

maybe the change being once e-fast2 kicked in the DOL no longer 'cares' if the guy is a member of a controlled group since you don't 'really file' an ez with the DOL (even if it is done on an SF)

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I have a somewhat related situation. Doctor is the only one deferring to 401 (k) $17,500. + $5,500. Catch-up. Safe Harbor Match. No other Employee Deferrals. No Profit Sharing contribution, so doctor is the only Participant with an Account Balance. Three other Participants completed Salary Deferral Election Notices, declining participation in the Plan.

Previously in a somewhat similar situation I filed a 5500-SF showing 2 Participants with only 1 with an Account Balance. Plan was audited, I.R.S. made owner give a 3% Top Heavy Minimum to non deferring Participant even though that person also completed a Salary Election Deferral Notice declining participation in Plan.

Question- Based on above,would you indicate that Plan had 4 or 1 Participants? If 1, would you file a 5500-SF or 5500-EZ? If an EZ would you file at all since Plan assets only $23,000.67.

Any input would be greatly appreciated.

Thanks.

DPSRich

Rich,

It looks like the other people qualified for the plan at one time or another. Whether or not they are making 401(k) contributions is irrelevant. They are participants in the plan even if they are just allowed to make 401(k) contributions (and choose not to).

Therefore, unless all the other people are the spouses of the owner ;) then it is not a "one participant" plan.

I would say 4 participants, 1 account balance.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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Exactly Tom...it appears a one participant plan of a controlled group can file a 5500-EZ - in this case you still would insert the controlled group code in Section IV, question 9a. The benefit of doing this is the data is not made public, whereas a 5500-EZ would be published on the net. Strange difference. Thanks for confirming my recollection of the historical instructions.

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