5500 for terminated plan without Schedule B

[AndyH]

This post may belong in the 5500 section but I thought I'd try here first.

I have a calendar plan with a termination date of 12/31/2000 which paid out the final assets 3/2002. I'm doing a 5500 filing for 2001.

As I understand it, no Schedule B is required for 2001 since the plan terminated effective 12/31/2000.

Yet, I see no question on any of the 5500 filings that would lead a reviewer, scanner, or computer to determine that the Schedule B was correctly omitted. There's one box on Form 5500 that lets you indicate if the plan still exists at EOY for PBGC purposes. There's another question somewhere about whether a termination has occurred in this or a prior year, and if so, whether a reversion occurred.

It looks like a rejection notice will be automatic. Am I missing anything?

[Guest Keith N]

You are correct that no Schedule B is required, but both Schedule H and I contain a question regarding a "resolution to terminate".

I don't know if that will assure you that it won't be bounced, but if it is, you just tell them why you didn't file a Schedule B. I wouldn't anticipate any problem.

[mwyatt]

Past experience is that the form will be bounced (as prior 5500EZ filings were bounced also as there were never any questions on the Form relating to termination). We always included an attachment to the filing to the effect of

Attachment to 2000 Form 5500XX

Plan Sponsor: ABC, Inc.

Plan Name: ABC, Inc. Defined Benefit Plan

EIN/PN: 04-1234567/001

This pension plan was terminated on December 31, 1999. As the date of termination precedes the first day of the plan year covered by the 2000 filing (i.e., January 1, 2000), no Schedule B is required to be attached as the plan is no longer subject to the minimum funding standards under IRC 412.

Sometimes someone would actually read the attachment and we would hear nothing back, sometimes they wouldn't and we would get the reject letter. Upon explaining to the reviewer, however, no further action would be needed (although the DOL seems awfully picky in having you write a response correcting their error, rather than the IRS's former flexibility when informed on the phone of their error).

To be safe, may want to inform client ahead of time that the DOL may erroneously kick out the form.

[AndyH]

Good idea. Thank you.

[Guest David M. Lipkin]

The problem here is that your DOT happens to be an EOY date. Otherwise, if it were 12/29/01, the ending date on the top of the Schedule B would simply reflect the DOT and it w/b clear when the clock stops.

I also do the Attachment

thx

David

[Guest David M. Lipkin]

The problem here is that your DOT happens to be an EOY date. Otherwise, if it were 12/29/01, the ending date on the top of the Schedule B would simply reflect the DOT and it w/b clear when the clock stops.

I also do the Attachment

thx

David

[mwyatt]

Actually, we've always indicated the full year on the top of Schedule B (and tracked FSA interest, etc.) through the full year regardless of the termination date. I don't see how the date on the Schedule B would help; besides, I'm assuming that the Schedule B with the termination date would be included with the prior year filing, not the current year set of forms.

The real problem is the elimination of the termination questions on the 5500 (now found on Schedule I) as in no place on the forms do you now enter the year in which the plan terminated. At least on the old 5500-C, you did have the question asking whether the Schedule B was required to be attached, as well as indicate the year in which the plan terminated.

Eventually all the bugs will be worked out. Last winter I went through this very same issue on the phone with a contact @ Lawrence; their level of knowledge was low concerning the noninclusion of the Schedule B. She finally talked to her supervisor and found out that we didn't need to include the Schedule B (but of course we still had to write a letter to the effect, which wasted some more time on their error). Best bet is to always include the attachment (and let the client know that the filing may still be bounced).