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Non-ERISA Plan files 5500


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I have a client who came to us with a Non-ERISA plan and appeared to meet all the requirements to remain Non-ERISA.  They just told me they filed a 5500 for 2016.   Has this filing damaged their argument that this plan is Non-ERISA?

THank you.

Patricia Neal Jensen

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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Technically, no.  The plan is either subject to ERISA or not, and based on what you said I will assume that it is not. (I am sure someone else will suggest that maybe it is not a safe assumption, but I am not going to get into that.)  However, the employer would be wise to "withdraw" the filing in some fashion.  I don't believe there is any procedure for doing that, so I would write a letter to DOL, certified mail/return receipt requested,  telling it that the filing was a mistake, and why it was a mistake.  That will at least create a paper trail. 

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In general, I don't think that an erroneous 5500 filing would subject the plan, otherwise exempt, to ERISA coverage.

Why are they a non-ERISA plan?  If the sponsor is a governmental entity, I would think that filing a 5500 would have no effect.  A governmental plan would remain a governmental plan, exempt from coverage by ERISA.

I also recall that a non-electing church plan would have to do more than file a Form 5500 to effectively elect to be subject to ERISA (i.e., there would have to be an explicit election of coverage - merely filing a Form 5500 would not be considered an election of coverage).

Always check with your actuary first!

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Thank you.  The sponsor is a 501(c )(3) so more difficult analysis than if it was government or a non-electing church.  It is employee contribution only and has met all the other requirements of the Safe Harbor.  Thanks for all the responses.  We are now pondering the issue of writing a letter to the DOL, etc.

PNJ

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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  • 1 month later...

Simply filing 5500 does not make the plan ERISA.  Issue resolved with assistance of a friendly attorney.

 

Thanks

 

PNJ

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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Resolved how?  It was perfectly clear to all of us that the 5500 filing did not transform the plan to an ERISA plan.  What we, or at least I, were suggesting was a way to prevent getting threatening letters from DOL or IRS in the future because you stopped filing.  

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