Jump to content

Penalty Relief Program for Form 5500-EZ Late Filers


AdKu

Recommended Posts

Background:
A potential client adopted a one-participant 401(k) plan (AKA Solo 401(k) plan) in 2015. The plan assets were over $250K by the end of 2020 and the brokerage account services provider didn't file Form 5500-EZ.

Question:
1)    Can this plan use the Penalty Relief Program for Form 5500-EZ Late Filers to fix the error?

       https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers


2)    Are there any additional things I need to take into consideration?

Link to comment
Share on other sites

1. Sure, why not? Unless the plan sponsor has already been contacted by the IRS.

2. If the prior service provider didn't do something as basic as file a 5500, who knows what else they might have done wrong? I would start by making sure the plan document is up to date with all required restatements and amendments. It also couldn't hurt to ask about any current or former employees, controlled group or affiliated service group issues, other plans, etc. etc. 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

Link to comment
Share on other sites

Thank you, C. B. Zeller,

Reading Plans Eligible for the IRS Penalty Relief Program for Form 5500-EZ Late Filers on the IRS website is perplexing because it uses the phrase "Non-ERISA plans only."

Isn't an owner-only Solo 401(k) plan an ERISA plan with no testing requirements?

Why is it critical to use "non-ERISA plans only"?

      Plans eligible

  •  One-participant plans covering a 100% owner or a partnership, and their spouses (no other participants). Non-ERISA plans only.
  • Foreign plans subject to IRS annual reporting that are maintained outside the U.S. primarily for non-resident aliens.

 

Link to comment
Share on other sites

They're talking about Title I of ERISA, meaning it covers actual legal employees rather than only a sole proprietor or partners.  This basically means it's under the umbrella of the IRS only, and the IRS's penalty relief program is the "comparable" to the DOL's program for late 5500-SF and 5500 filings (plans covered under Title I, with employee participants).

A Title I (or, as you might, "ERISA") plan with missed 5500s has a DOL-run program for missed filings.  This IRS version is specifically for the solos, since they're outside the DOL's jurisdiction in this case.

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...