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2% Sharholder of S-corp: attribution included for 5500-EZ


BG5150

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1 hour ago, RatherBeGolfing said:

They have to.

What is the penalty for filing a 5500-SF instead of an EZ for a one-participant plan?  Is anyone really going to care?

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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The instructions are pretty clear that a one-participant plan can't file on a 5500-SF, so I suspect they'd counter that no valid filing was done at all.  (Kinda like if you try to paper-file when you're not eligible to do anything *but* electronic filing of the EZ.)

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Just a note that while this company would file 5500-EZ, they are still subject to all the other requirements of Title I - bonding, SARs, etc.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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47 minutes ago, C. B. Zeller said:

Just a note that while this company would file 5500-EZ, they are still subject to all the other requirements of Title I - bonding, SARs, etc.

That's very interesting.

My 5500 software does not have the SAR/AFN feature if the filing is an EZ.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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59 minutes ago, C. B. Zeller said:

Just a note that while this company would file 5500-EZ, they are still subject to all the other requirements of Title I - bonding, SARs, etc.

C.B., could you expand on your thoughts on this topic (why is Title I invoked with 1 direct owner and 1 owner-via-attribution)?

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PPA sec. 1103 directed the IRS to modify the requirements for filing a 5500-EZ to define the term "partner" as including a 2% shareholder in an S-corp, as defined in 1372(b). 1372(b) references 318 for attribution of ownership. That change finally made its way into the instructions for the 5500 series starting with the 2020 forms.

PPA did not modify the definition of employee benefit plan in Title I of ERISA. So the daughter is still considered an employee for all other purposes under Title I.

It was @RatherBeGolfing who pointed this out to me in the first place, so maybe they would be willing to chime in as well.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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