5500 EZ One-participant retirement plan

[Roz Nard]

net plan assets are now below $250K, do i need to continue filing EZ5500?

[ETA Consulting LLC]

If the plan assets (at the end of the year) are below 250K, then you do not need to continue to file.  As a practical matter, it may be good to continue.  Filing the return gives you the 3 year Statue of Limitations for assessment of taxes; which "may" be of some value to the client.

Good Luck!

[Roz Nard]

Thank for your pdq response....I was considering not filing since this is 2nd year i have under 250K. I assume you mean IRS assessment of taxes, right?

[ETA Consulting LLC]

On 7/14/2018 at 12:17 PM, Roz Nard said:

 I assume you mean IRS assessment of taxes, right?

This is potentially an entire book and delves into how the trust (which is a separate legal entity) gets taxed in the event of plan disqualification.  Typically, all "open" years are taxed and the trust would need to file a Form 1041 to pay those taxes.  If the Form 5500EZ has been filed and the statute of limitations has expired, then there is no assessment of taxes.

The book gets further involved when the IRS uses the 'tainted assets' theory or shows that the Statute of Limitations doesn't apply because of fraud or an intentional evasion of income taxes.  

At the end of the day, it's just good to know that filing the Form 5500 will start a Statute of Limitations which "may" or "may not" be of value.

Good Luck!