Final year 5500 filing

[Guest RAJ]

I posted this under the 5500 topic as well. If a Flexible Spending Account Plan terminated on 12/31/01 and participants are still within the closing period to submit claims (assets are still in the account), would the employer file a final year filing for the 2001 plan year or after the close out period in 2002? (A 2002 short/final year filing)

[SLuskin]

The 5500 for 2001 would be the final. Remember, the expenses reimbursed during a grace period in 2002 would still have to have been incurred in 2001. There would be no plan year 2002 participants, eligibles, employer contributions or salary reductions.

[jpod]

I'm not so sure about the previous response. I don't believe this situation is covered in the 5500 instructions.

Section 6039D is the source of the 5500 filing requirement for a Section 125 plan under the Internal Revenue Code, and it says (I'm paraphrasing )that a filing must be made for any year in which the Section 125 income exclusion applies. This could mean that if there are tax-free reimbursements during 2002, a 5500 is required. It could also mean that if the mere potential for tax-free reimbursements existed during 2002, a filing is required.

Whether a filing would also (or in any event) be required under Title I of ERISA is an open question.

[KIP KRAUS]

I disagree with jpod. The income exclusion was in 2001, not 2002. The mere fact that a person receives this reimbursement in the grace period for filing claims in 2002 doesn’t mean the income is being excluded in 2002.

I agree with Sluskin that there would be no plan participants in 2002 therefore the plan is terminated 12/31/01. Just my opinion and that’s the way I’d proceed.

[Guest RAJ]

Thanks to all of you for your feedback. The fact that the actual contributions had taken place in 2001 and that information is what is contained on the 5500 make sense. It looks like a 2001 final year filing.