Who Is Required To File Form 5500?

[Stash026]

I remember someone once telling me that if Plan Assets were under $250,000 the Plan was not required to file Form 5500 but I don't see it in the actual instructions.  Is that no longer the case or does it only apply to those who file Form 5500-EZ?

Thanks everyone!

[Lou S.]

Only applies to Form 5500-EZ and those eligible to file that form.

[thepensionmaven]

Also applies to Form 5500-SF, check the instructions.

[AlbanyConsultant]

2 hours ago, thepensionmaven said:

Also applies to Form 5500-SF, check the instructions.

Can you point me to the section of the 5500-SF instructions you're referring to?  I think that's just a one-person plan rule (I suppose if you are used to filing one-person plans on 5500-SFs you could say that you don't file 5500-SFs for one-person plans with assets <$250K...).

[Lou S.]

10 minutes ago, AlbanyConsultant said:

Can you point me to the section of the 5500-SF instructions you're referring to?  I think that's just a one-person plan rule (I suppose if you are used to filing one-person plans on 5500-SFs you could say that you don't file 5500-SFs for one-person plans with assets <$250K...).

Yes if you are eligible to file an EZ but chose to file a 1 person SF you are not required to file if assets are under $250K. But it only applies to plans eligible to file an EZ not all plans under $250K. You can search the 5500-SF instructions til the cows come home but unless they make changes to the instructions in a future printing, you won't find it.

[ESOP Guy]

Can I suggest you file a Form 5500 always?  The only way a statute of limitation clock starts is if you file a Form 5500.  Back when I worked on very small plans (a very long time ago!) we still did the trust accounting.  So we had all the data for an EZ or SF always.  It is very easy to complete and file a form.  It would take less than a man hour to protect your client more it seems like. 

It just isn't that much work to give a client added protection vs no statute of limitation.  

 

[Bird]

17 hours ago, ESOP Guy said:

The only way a statute of limitation clock starts is if you file a Form 5500.

What is being protected by starting the clock?

[ESOP Guy]

26 minutes ago, Bird said:

What is being protected by starting the clock?

Stopping the IRS from auditing all forms.    Maybe it is the CPA in me but from my first job at the IRS the idea there are forms you can't audit because of the statute of limitations happens was talked about as important.  You can say that is pretty small in this case.  Maybe it is a small benefit.  But the cost is very small.  It has been a very long time since I worked on this small of plans but we had all the information to complete the form to do the work  we did for the client.   All you had to do was have some input done and a quick review.  Low cost maybe low benefit but I will take for the cost. 

[Bird]

9 minutes ago, ESOP Guy said:

Stopping the IRS from auditing all forms.    Maybe it is the CPA in me but from my first job at the IRS the idea there are forms you can't audit because of the statute of limitations happens was talked about as important.  You can say that is pretty small in this case.  Maybe it is a small benefit.  But the cost is very small.  It has been a very long time since I worked on this small of plans but we had all the information to complete the form to do the work  we did for the client.   All you had to do was have some input done and a quick review.  Low cost maybe low benefit but I will take for the cost. 

Fair enough.  My own philosophy is that if I save a half hour 100 times by not filing the form and have to spend 5 hours 1 time I'm way ahead (and my clients in aggregate, in theory).  Assuming there is nothing "wrong" that would sink the client that is...but that's kind of the point of my Q, I don't think that filing protects the deductions in any way if they were in fact not legit, and beyond that, I don't really know what is in fact being protected.  

BTW my thinking on this is influenced by a bad experience...a little off-topic but I think relevant.  We used to dutifully file a 5310 and wait for approval before distributing assets.  Once (the last time!) the IRS came back and audited the plan, a couple of years later.  It was a real nuisance, with the client (no longer in existence) having to go to a storage warehouse of some sort to dig out payroll records, etc.  I'm convinced that it was audited because we submitted the 5310, although I have no real reason to think so other than bitterness.  But the point is that we were no better off having filed the 5310 - it did absolutely nothing.  (And in fact if you work through it, the 5310 doesn't do much more than assure you the document is ok...which if you are using a pre-approved plan, would be pretty hard to screw up.  They are not reviewing plan operations - contribution allocations, etc. - as they would in an audit and are not giving anyone a "pass" when they issue a letter on a 5310 submission.)  Anyway, ever since, I've taken the position that if I don't have to submit something, I'm not.  I'll let you all know the first/next time that is a problem.

[thepensionmaven]

True, Form 5500-SF or 5500-EZ does not have to be filed until the assets exceed $250,000, but the Form is needed upon termination, with $0 at the end of the year.

[RatherBeGolfing]

On 12/6/2019 at 9:53 AM, Bird said:

My own philosophy is that if I save a half hour 100 times by not filing the form and have to spend 5 hours 1 time I'm way ahead (and my clients in aggregate, in theory).

I only do a handful of them, and the ones I do are as favors to a client or contact.  There is so little work required on the vast majority of them that I will happily pass on a client who complains about a fee for 30 mins of work.  Completing the EZ and sending instructions to the client takes about the same amount of time it takes to explain to the client that they don't have to file because of XYZ.

I make it known that if they want me to do the work, they will also file the EZ.