Controlled Group and 5500

[KateSmithPA]

First, let me say that I have searched the boards for messages about controlled groups and 5500's. I hope I have understood what I have read.

My client has two separate companies with separate, identical, plans. Companies are a controlled group.

The first plan had 146 participants at 1/1/2001 - therefore, clearly requires an audit.

The second plan only had 1 participant at 1/1/2001.

This is the way I understand things:

We file one combined 5500 for these two plans.

Since the first plan has filed a 5500 in the past (the other plan was new in 2001), I assume it is okay to use that company's EIN for the 5500?

The second company completes a separate Schedule T.

I guess my real question is about the audit. Does the audit cover the assets of both plans, or just the first plan?

Am I missing anything else?

Thanks for any help you can give.

[Blinky the 3-eyed Fish]

Kate, you need to file two separate returns for each plan. The Schedule T will then be completed using the figures from both plans, if the plans are aggregated for coverage and nondiscrimination, or with only the census figures from the separate plans if not aggregated.

The audit will apply to only the one plan.

Think of it this way. The two employers are considered a single employer because they are in a controlled group. So, if a single employer had two plans, you wouldn't file one return for both plans. Also, what if one of the plans was a DB plan and the other a DC plan? That wouldn't be confusing at all if one return was filed.

[KateSmithPA]

Thank you very much. I think I need to find a different way to make a living.

[Blinky the 3-eyed Fish]

I know if I was an M.D., I wouldn't be an actuary.

[R. Butler]

Actuaries actually consistently rate as the top job in America. Low stress, decent pay and nobody has any idea what you are doing.

I'm not currently an actuary, but maybe one day.

[KateSmithPA]

I'm not an MD! When I went to register originally, my name was already taken. At that time, I lived in Maryland. I was prompted to try KateSmithMD. I took it without thinking. Now, I live in Pennsylvania, but I haven't been able to figure out how to change my user name. I feel like a fraud.

[Blinky the 3-eyed Fish]

I think the obvious solution is to enroll in medical school immediately! In 6-8 years, after your internship is over, the fraud label will fall by the wayside.

[KateSmithPA]

Blinky, you have truly made my day. Not only did you answer my question, but you gave me a good laugh. Thanks so much.

[JohnCheek]

I'm not sure I agree with Blinky about needing two separate returns for each plan.

If you really have two plans, you should file two 5500s.

Since you have a controlled group, each 5500 will include Schedule T participation data for the whole group, as if it were one company.

You may have to "aggregate plans" when doing the testing for the Schedule T of the smaller company.

[Blinky the 3-eyed Fish]

Sorry, it was a typo. I meant to say you need to file two separate returns, one for each plan.