Previously unrelated adopting ers now related

[Kathy]

Stupid, I know. I'm a little frazzled.

Prior to 2002 there was enough separate ownernship that the plan sponsor and adopting employer were not sufficiently related to create a controlled group. Therefore we always filed 2 Forms 5500. One plan, 2 unrelated employers, 2 forms 5500.

Well, in 2002 everything changed. They are now a controlled group. So, one plan, one employer, one 5500 - right?

How do I do that? There was no merger of plans, no termination, no distributions. Just a little sharing of some stock. Oh please help! So won't the IRS still be looking for 2 returns? I can't figure out how to tell them there just shouldn't be 2 this year!

[Blinky the 3-eyed Fish]

Why were 2 returns filed in the first place if you only have 1 plan?

[Kathy]

Maybe I'm even dumber than I thought.

It came to us that way from one of the large (big 8, big 6, big?) accounting firms. The sponsoring employer filed a form 5500 and then the adopting employer filed a 5500 because they were unrelated. We just followed what they had been doing for the several years prior to our take over in 2001 - they're always right aren't they?

[Blinky the 3-eyed Fish]

I posed the question to see if you had a specific reason for filing 2 5500's. See the Derrin Watson answer at the link below. Basically, if the funds are separated completely, you would have to file 2 5500's, but that scenario wouldn't change just because the employers became a controlled group.

http://benefitslink.com/perl/qa.cgi?db=qa_...employer&id=184

So, after assessing your situation, get back to us on how many 5500's there should be.