Form 5500-EZ, only for owner & spouse?

[Guest jvandyke]

We have a C-Corp plan where the owner & his son are the only employees. We have been filing a Form 5500-EZ for the past 5-6 years. The rules for filing a Form 5500-EZ state the employees must be the owner & spouse only. Does anyone have any correction suggestions? Thanks!

[Belgarath]

Well, you could look at DFVC. The small plan cap is 1,500.00, so the monetary penalty is relatively small.

Alternatively, you could call the DOL and explain the situation. 'Tis possible that since timely forms were filed each year, that they might be reasonable and allow you to file proper forms with no penalty. Personally, I'd try this first, and if they aren't reasonable, then file under DFVC.

I've heard anecdotal evidence that since DFVC is now available, the DOL is less willing to totally waive penalties, but I have no direct experience with this - the situations I've had to deal with have been simple DFVC - someone didn't file at all, for example. Your situation is a bit different. I'll be interested to see if anyone has "war stories" on a similar situation.

[WDIK]

Alternatively, you could call the DOL and explain the situation. 'Tis possible that since timely forms were filed each year, that they might be reasonable and allow you to file proper forms with no penalty. Personally, I'd try this first, and if they aren't reasonable, then file under DFVC.

Of course, to be eligible for the reduced penalties, the required filings under the DFVC Program must be made prior to the date the administrator is notified in writing by the DOL of a failure to file timely. If the DOL is notified of the failure by the plan administrator, there may be some timing issues to consider as well.

[No Name]

Can you argue that the son is an Owner?

Oops, just brought up the Form instructions. No wiggle room there.

[K-t-F]

what about husband and wife and daughter... daughter not eligible because of 1000 hour requirement, still file EZ?

[WDIK]

Until the daughter becomes eligible you should still be able to file the EZ.

[K-t-F]

If the situation is a 401k and the daughter is eligible to make deferrals but not to receive an employer contribution would they still be able to file an EZ? (Just being the devil here)

[WDIK]

I wouldn't think so, because she is considered a participant if she is eligible to defer, whether she defers or not. (See definition of active participant in the Form 5500 instructions.)

[K-t-F]

Revisiting this question.....

What about Plan with owner and spouse and 1 EE that does not work 1000 hrs... assets less than $100K in plan...

1. Can file EZ?

2. Since assets less than $100K is an EZ required yet ?

I understand that once the EE becomes eligible to participate then the EZ is not allowed..

[Lame Duck]

PATA,

IMHO:

1. Yes - the instructions to the 5500-EZ describe it as a one participant plan if the plan covers only the owner and spouse. As long as the other employee is not eligible, you can still file the 5500-EZ.

2 If assets are less than $100,000 you do not need to file a 5500-EZ. See the instructions under Who May Not Have To File. However, it is probably a good idea to file the form regardless of the assets in the plan.

[WDIK]

Until the plan year that the other employee becomes eligible a Form 5500-EZ can be filed. If assets are below the filing threshhold, no filing is necessary.

[K-t-F]

That is what I have always thought being on auto-pilot for many years. It wasn't until many small employers started putting in place individual 401K plans that I have been asked soooo many questions. Each sponsor saying that they have read or were told ... etc etc. Sometimes you just need someone to agree with you. I liken it to hearing from another parent that their child is trying to use the same asinine argument to defend their actions or get what they want.... know what I mean?

Thanks!