5500 or EZ?

[mming]

The owner and sole participant/employee of a profit sharing plan that has been filing 5500-EZs every year recently got divorced and now his ex-wife is an alternate payee with a segregated account balance in the plan.

A colleague tells me that the plan can still file an EZ. I'm thinking that since the alternate payee is afforded the status of a beneficiary (e.g., getting copies of SPDs, SARs, a certificate showing her balance) a 5500 should be filed until the year after she is paid out. Who is correct?

[bzorc]

I had a divorce situation (but no QDRO) where both ex-spouses left their account balances in the plan, and filed the 5500 instead of the 5500-EZ. Went with the "better safe than sorry" method.

[Belgarath]

I don't have any definitive answer - not sure there even is one. But, like bzorc, I'd take a conservative position. The instructions for the 5500 EZ state the plan cannot "... provide benefits for anyone except..."

While you could maybe argue that amounts segregated under a QDRO do not constitute "providing benefits" under the plan, I'd be very reluctant to hang my hat on that without some clear guidance. Granted that this result seems a little foolish to me, I'm still inclined to err on the side of caution - it isn't really that big a deal to prepare the 5500 as opposed to the EZ in this situation. Just another of those minor PIA's which enrich our lives!