Jump to content

Stop 5500-EZ?


Sara Hotvedt

Recommended Posts

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?  

Link to comment
Share on other sites

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. 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

Link to comment
Share on other sites

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.

 

 

Link to comment
Share on other sites

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!

Link to comment
Share on other sites

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.

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...