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IRS Form 1041 and NQ Plans

Guest mam

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What criteria must a NQ Plan meet in order to be required to file this form? Is this form sort of the "5500 of NQ Plans"? Why must(??) some of my NQ plans file this form, but not all of my NQ plans?

Any info on this form (other than the Instructions for Form 1041 and all the Schedules, as published by the IRS...I've read it) would be appreciated. Thanks!

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Guest KLSusac


The Form 1041 would be filed by the estate of a plan participant when that plan participant's deferred compensation account is paid upon death. It is an individual filing not a plan filing.

For purposes of Plan reporting, a nonqualified plan is required to file a letter with the Department of Labor within 120 days of plan implementation. Once that letter is filed there are no annual reporting requirements.



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A 1041 is used to report trust income; it is the tax return for a trust, generally including non-qualified trusts. But if you have read the instructions, you will see that there are alternative ways of reporting the trust income for grantor trusts, since the income is includable in corporate income. Also, sometimes a trustee's powers are so limited that the IRS does not consider there to be a separate taxable entity, so that a company with a non-qualified trust might take the position that a 1041 is not needed.

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