Switching From Form 5500-SF to Form 5500-EZ

[metsfan026]

Taking on a new client where the forms have been filed as a Form 5500-SF.  However, it's a one-person plan and really should have been filed as a Form 5500-EZ from inception.  Is there any issues with just making the switch for the 2021 Plan Year or should we continue to file it as an SF?

Just want to make sure we don't create any issues for the client.

[Lou S.]

I've had a few plans that used to have common law employee and became owner only and switched to EZ without issue. I don't know if it was always supposed to be EZ but was filed as SF if you'd have an issue which is your case and different set of facts. I'm pretty sure if you switched to the correct form the current filing year you won't have a problem with that particular filing. The question is what about the prior filings?

I don't know what the correct answer is on the prior filings and I think I've seen some conflicting guidance in posts on this site related to similar issue. A few options -

-File the old EZ under the IRS late flier program under the theory that a valid return hasn't been previously filed.

-File amended EZs for the years that SFs were originally filed under the theory that the returns were timely filed but on the wrong form.

-leave the SFs alone under the theory that information returns contained all the correct information and were timely filed but are open to public inspection as an SF and would not have been had an EZ been filed.

Again I don't know what the correct answer is but those are the most reasonable choices as I see them. Good luck with whatever decision you chose.

[metsfan026]

12 minutes ago, Lou S. said:

I've had a few plans that used to have common law employee and became owner only and switched to EZ without issue. I don't know if it was always supposed to be EZ but was filed as SF if you'd have an issue which is your case and different set of facts. I'm pretty sure if you switched to the correct form the current filing year you won't have a problem with that particular filing. The question is what about the prior filings?

I don't know what the correct answer is on the prior filings and I think I've seen some conflicting guidance in posts on this site related to similar issue. A few options -

-File the old EZ under the IRS late flier program under the theory that a valid return hasn't been previously filed.

-File amended EZs for the years that SFs were originally filed under the theory that the returns were timely filed but on the wrong form.

-leave the SFs alone under the theory that information returns contained all the correct information and were timely filed but are open to public inspection as an SF and would not have been had an EZ been filed.

Again I don't know what the correct answer is but those are the most reasonable choices as I see them. Good luck with whatever decision you chose.

My thoughts are the SF actually provides more information than an EZ, so the incorrect filings shouldn't be an issue.

At the same time, if there hasn't been an issue before should we just continue filing the SF for now and figure the status quo is the best way to go?

[Bri]

Well, you used to be able to file one-participant plans on an SF, though.  Checking the "one-participant plan" box was supposed to prevent it from showing up on the public disclosure site.  In which case maybe the plans shouldn't be viewable, but probably that doesn't rise to a real "issue". 

Under penalties of perjury, the sponsor didn't say it was a one-participant plan on the return.  Gasp!

[Lou S.]

My thoughts (and not a lawyer) is leave the SFs that have been filed as is. File EZ going forward. And Bri brings up a good point, until recently you could file SF-1partcipant plan. Though my memory is bad on just how recently.

[metsfan026]

8 minutes ago, Bri said:

Well, you used to be able to file one-participant plans on an SF, though.  Checking the "one-participant plan" box was supposed to prevent it from showing up on the public disclosure site.  In which case maybe the plans shouldn't be viewable, but probably that doesn't rise to a real "issue". 

Under penalties of perjury, the sponsor didn't say it was a one-participant plan on the return.  Gasp!

Technically it still can be filed on the SF (because we put the participant account).

On the EFAST website it just gives the following warning:

"Warning: If you have a one-participant (owners/partners and their spouses) retirement plan, file the Form 5500-EZ instead of the Form 5500-SF. Review 'Who Must File Form 5500-EZ' in the Form 5500-EZ instructions to determine whether you should file the Form 5500-EZ. Note that the Form 5500-SF generally is subject to public disclosure on DOL's website while the 5500-EZ is not."

So I guess that gives the advice to change to the EZ?  Does that sound right?

[C. B. Zeller]

40 minutes ago, Lou S. said:

My thoughts (and not a lawyer) is leave the SFs that have been filed as is. File EZ going forward. And Bri brings up a good point, until recently you could file SF-1partcipant plan. Though my memory is bad on just how recently.

2019 was the last year you could file a one-participant plan on SF. Starting in 2020 you could file the EZ electronically.

36 minutes ago, metsfan026 said:

Technically it still can be filed on the SF (because we put the participant account).

If there is a non-owner participant in the plan, even if they are not active, then you can not file 5500-EZ.

[metsfan026]

6 minutes ago, C. B. Zeller said:

2019 was the last year you could file a one-participant plan on SF. Starting in 2020 you could file the EZ electronically.

If there is a non-owner participant in the plan, even if they are not active, then you can not file 5500-EZ.

There isn't, the owner is the only employee on the books.

So is it prudent just to switch to the EZ and move forward with it?

[chc93]

I recall hearing in the past that if you filed a 5500-SF in prior years (whether you had to or not), then  when you switch to  5500-EZ you will almost always get a letter from the IRS (or DOL?) asking for the 5500-SF filing for the year you switched to and filed the 5500-EZ.  No big deal as is totally explainable, but still gotta go through the process... never a fun exercise.  Note that this was when 5500-EZ filings were paper, so no connection between prior year and current year filings.  Maybe with everything electronic now, this is no longer an issue.

[C. B. Zeller]

2 hours ago, metsfan026 said:

There isn't, the owner is the only employee on the books.

Then what does "because we put the participant account" mean, and how is it relevant to whether you file SF or EZ?

[metsfan026]

7 hours ago, C. B. Zeller said:

Then what does "because we put the participant account" mean, and how is it relevant to whether you file SF or EZ?

Sorry, that was a typo.  It was supposed to read "participant count", meaning on the SF it had been showing only 1 participant

[user12]

So, can you please clarify what the take away is from this discussion:  Can I switch from 5500-SF to 5500-EZ if a one-participant plan has been filing 5500-SF for several years, but it seems that it should have been filing 5500-EZ instead?  Thank you.

[Paul I]

See my response to your post under "Filed 5500-SF instead of 5500-EZ for several years – can I switch?"

 

 

 

[truphao]

FWIW, at the 2023 CCA Enrolled Actuary Conference the question was asked during the Q&A session with IRS.  They responded pretty firmly that one participant plan must file EZ.