5500EZ

[pmacduff]

Am I losing my mind or did I read somewhere that the asset limit for the 5500EZ owner only plan filing requirement is increasing from $100,000 to $250,000? I have looked through this website and my ASPPA Journals and the IRS website and haven't found any references, but I could have sworn that I read it somewhere and I have a broker asking on behalf of a client ......

Thanks in advance!!

[jevd]

SECTION 1103 of PPA see below;

. 1103. REPORTING SIMPLIFICATION.

(a) Simplified Annual Filing Requirement for Owners and Their Spouses-

(1) IN GENERAL- The Secretary of the Treasury shall modify the requirements for filing annual returns with respect to one-participant retirement plans to ensure that such plans with assets of $250,000 or less as of the close of the plan year need not file a return for that year.

(2) ONE-PARTICIPANT RETIREMENT PLAN DEFINED- For purposes of this subsection, the term 'one-participant retirement plan’ means a retirement plan with respect to which the following requirements are met:

(A) on the first day of the plan year--

(i) the plan covered only one individual (or the individual and the individual's spouse) and the individual owned 100 percent of the plan sponsor (whether or not incorporated), or

(ii) the plan covered only one or more partners (or partners and their spouses) in the plan sponsor;

(B) the plan meets the minimum coverage requirements of section 410(b) of the Internal Revenue Code of 1986 without being combined with any other plan of the business that covers the employees of the business;

© the plan does not provide benefits to anyone except the individual (and the individual's spouse) or the partners (and their spouses);

(D) the plan does not cover a business that is a member of an affiliated service group, a controlled group of corporations, or a group of businesses under common control; and

(E) the plan does not cover a business that uses the services of leased employees (within the meaning of section 414(n) of such Code).

For purposes of this paragraph, the term 'partner’ includes a 2-percent shareholder (as defined in section 1372(b) of such Code) of an S corporation.

(3) OTHER DEFINITIONS- Terms used in paragraph (2) which are also used in section 414 of the Internal Revenue Code of 1986 shall have the respective meanings given such terms by such section.

(4) EFFECTIVE DATE- The provisions of this subsection shall apply to plan years beginning on or after January 1, 2007.

(b) Simplified Annual Filing Requirement for Plans With Fewer Than 25 Participants- In the case of plan years beginning after December 31, 2006, the Secretary of the Treasury and the Secretary of Labor shall provide for the filing of a simplified annual return for any retirement plan which covers less than 25 participants on the first day of a plan year and which meets the requirements described in subparagraphs (B), (D), and (E) of subsection (a)(2).

[John Feldt ERPA CPC QPA]

That means the 2007 Form 5500-EZ has a $250,000 threshold for requiring the Form to be filed.

The 2006 Form 5500-EZ still has a $100,000 threshold.

[pmacduff]

Thanks much!!!

[jevd]

I have a related question regarding 5500 EZ filing.

I know that once a one participant plan or combination of plans exceeds the 100K limit( 250K as of 07 PYEs.) as of the end of a plan year that a 5500 EZ is required. I also know that a form is required for the final plan year regardless of plan size.

However, it is an understanding by some that once a form is filed, you must continue filing the form even if the plan never exceeded the $ limit.

I have checked the instructions for 5500 EZs and several commentaries. but cannot find the requirement if the plan value never exceeded the limit.

[JanetM]

jved, not sure I understand your question. My understanding - guy is sole prop and has two plans valued at $55,000 each at end of year. So he must file two EZ filings because aggregate assets are over the limit. Files EZ for each year assets exceed cap. Now for 2007 assets less than $250K so he can stop filing until he exceeds the cap or terminates the plan.

Maybe the confusion because prior to plan years beginning 1/01/1994 there was no exemption to filing requirement. All plans, regardless of assets filed.

[jevd]

JanetM,

I'm talking about someone who filed for a year when all plans totaled in aggregate less than 100K and have never reached the limit. Filed by muistake because he thought he had to. Plans still total less than 100K. Is he required to file since he has filed in past even though not required?

[WDIK]

Prior thread discussing filing when assets never exceed filing threshold: http://benefitslink.com/boards/index.php?showtopic=21497

Prior thread discussing filing when assets subsequently drop below filing threshold:

http://benefitslink.com/boards/index.php?showtopic=34014

[masteff]

Umm, I think we're overlooking a very important word in the 5500EZ instructions. On page 2, under Who May Not Have To File, it says "at the end of every plan year beginning on and after January 1, 1994." The key word being "every". So if you ever went over the limit in any year since 1994, then would have to continue filing 5500EZ. The example in that same section even says "and for all following years".

[jevd]

Thanks WDIK for the sites. And I agree that once your over the 100K limit you should continue to file until and through plan termination.