Switching from filing 5500 to filing5500EZ

[Guest ElKH]

Client has a shrinking business, and as of 2002 is the only employee and only participant in the plan. For 2002 we are shifting to filing the EZ.

I recall from a seminar years ago that in anticipation of this shift, you must mark the "Final Return" box on the last full 5500 filed, and the following year you file the EZ (but do not have to mark the "First Return" box).

Can anyone point me to that cite? Does my memory serve me correctly?

Thanks!

[WDIK]

In my experience, marking the box for a final return while end of year assets exceed $0 results in a letter asking for clarification. I believe that the situation you describe would require a letter of explanation.

[Lynn Campbell]

I have encountered this situation many times and have just filed the correct form and not X'd any of the Final Return or First Return boxes on either form...I've never received an inquiry from the govt. (so far).

[mwyatt]

I side with Lynn. I definitely wouldn't file a "final" 5500; the screening computers will kick your return back since you won't be showing 0 participants and 0 assets. Just file the 5500-EZ. If the client does get a letter asking for explanation, just respond (and I doubt that you will receive a letter from EBSA on this matter).