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Sara Hotvedt

Stop 5500-EZ?

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Is it safe to say that if a "solo" 401k plan's assets fall below the $250,000 threshold as of 12/31/2018 & they have filed the 5500-EZ in the past years, they can just stop filing without worrying about receiving correspondence from the IRS?  And then they start back up if their assets exceed $250,000 at the end of a future plan year?  

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27 minutes ago, Sara Hotvedt said:

"without worrying about receiving correspondence from the IRS? "

There is a decent chance there will be correspondence from the IRS. You would have a reasonable explanation, but that doesn't mean the IRS isn't going to send a form letter in a year or two asking where the Form 5500-EZ is. 

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Thank you.  I'll discuss with the client.  It's not like we charge much to prepare the 5500-EZ, but if they can avoid having to pay the fee unnecessarily, I'll give them that option & make them aware that they could receive a letter from the IRS.

 

 

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I had a client that received correspondence from IRS that they didn't need to file the 5500-EZ.  I had filed as a precaution.  The assets had dropped below $250K.  Never filed again until terminated.

 

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1 hour ago, imchipbrown said:

I had a client that received correspondence from IRS that they didn't need to file the 5500-EZ.  I had filed as a precaution.  The assets had dropped below $250K.  Never filed again until terminated.

 

Thank you!

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Subject to in-service withdrawal restrictions and other considerations (e.g. ability to do a tax free "Roth Two-Step"), we periodically drain "SoloK's" into Rollover IRAs to keep them under the $250K limit and have never filed thereafter or had clients contacted by IRS about filing even if 5500's had been appropriately filed prior. FWIW.

 

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