I am preparing a 5500. I have questions.

[caryn22359]

I am preparin a 5500 for the first time. It was done by an accountant who has made mistakes on it and stirred up inquiry letters from the DOL.

1. This is a defined contribution protype plan,There was changed in the plan due to the tax law in 2003. Is there a place on the return that indicates a date for amendmants?

2. The plan has its assets in a brokerage house and a bank. It contains mutual funds and CD's. Page 2 line 9 a3 ( plan funding arrangement)indicates trust and line 9a could be checked as general assets of the sponseer . I am not sure which box to check . the same is true for line 9b plan benefit arrangement. In the past schedule I was not included. I believe it should be included. It is a small plan.

3.The plan has two trustees. Can 2 schedule p's be filed out. In the past only 1 form was filed.

4.I am filling out a ScheduleA . The pension plans pay an administration fee of 25 a year to a life insurance company. Does this need to be lised in part 1? It is not a commission.

5.. On schedule A the contract number was wrong in prior years. Should I correct it or leave it.

Thanks for your help....

[E as in ERISA]

If you mark that the assets are held in the general assets of the sponsor, you will certainly get more letters and/or other inquiries from the DOL.

Is there someone else you could hire to complete it?

[caryn22359]

If you mark that the assets are held in the general assets of the sponsor, you will certainly get more letters and/or other inquiries from the DOL.

Is there someone else you could hire to complete it?

Why would i get more letters stating that it is the general assets of the sponser?

[caryn22359]

No unfortunately I must complete this year. Why would it be terrible if i put down the general assets of the sponser Katherine and not the trust.

[Guest b2kates]

Yes you can have more than 1 trustee complete and sign Schedule P

it is a technical/legal requirement that pension assets be held in a separate trust, if held in general assets of employer- a prohibited transaction.

unfunded welfare plans can be held in the general assets of the employer

[E as in ERISA]

http://www.form5500help.com/q_a_main.html

[Guest Pensions in Paradise]

Could you explain to us why you can't hire a qualified person to help you complete the Form 5500? It is obvious that you have never completed a 5500 before.

[could be me maybe not]

Not all qualified plan assets are held in a trust. A plan with all assets invested exclusively with an insurance company need not necessarily have a trust. But if assets are CDs and stocks, why is it with an insurance company?. Or is it? You say all assets are with a brokerage house and a bank. Then yes, you need a trust.

Specific questions

1 No.

2. Sounds like trust but we cannot be certain. Do NOT answer general assets. If the plan has insurance, or if some assets are invested in insurance, then trust and insurance is the likely answer.

3. You only need one Schedule P. Either can sign.

4. Probably not.

5. Correct it.

[E as in ERISA]

I'm concerned about what other questions might be answered wrong. E.g., how are you answering the audit questions on Schedule H, if applicable? Just beware that if you get to your third notice or so with the DOL (can't remember exactly which one), they are likely to assess you $5,000 even if you respond adequately. And if you don't answer it adequately, they may be pressing for $50,000. It seems like it would be cheaper to pay someone to prep the Form 5500.

[could be me maybe not]

WADR, I have a philosophical problem with those urging the need for a professional preparer.

Shouldn't a taxpayer/plan sponsor be able to fill out a 5500 for a small plan? Is there anything in the instructions that says that a filer is expected to pay for professional help?

The DOL used to (and perhaps still does) treat third parties like trash. They were persona non grata. Now they are an integral part of the EFAST process?

Objection on libertarian grounds.

[Guest Pensions in Paradise]

could be me - thanks for the humerous post. I needed a good chuckle today.

[could be me maybe not]

Do you disagree PiP?

[Guest Pensions in Paradise]

Yes and no. In an ideal world, an individual could complete their own tax returns, fix their own car if it were to break, represent themselves in court, etc. Unfortunately, we live in a complicated world which means that we occasionally have to hire professionals to perform certain tasks for us.

I could try to fix my own car, but I wouldn't be too surprised if it were to break down on me shortly thereafter. A plan sponsor could do their own 5500. Just don't be surprised if the IRS/DOL came calling shortly thereafter.

[could be me maybe not]

"Come calling" is fine. But, no harm, no foul. They should be treated with courteousy and certainly not fined for making a good faith effort.

And I am referring to the 5500 filing itself; not necessarily the administration. That to me is different. The DOL radicals have been clear on fiduciary responsibility and the need to hire experts in such area where necessary expertise is lacking.

Read the paperwork notice stuff where the hours of study are itemized for 5500 completion. A snap.

[E as in ERISA]

I wouldn't insist on having a professional preparer. But when the designated in-house preparer is asking whether they can mark that the assets of a retirement plan as being held in the general assets of the employer, then I would suggest that they get advice. No matter how good it is, this message board should not be used as a replacement for professional advice.

[JanetM]

I agree with Katherine. Yes the plan sponsor should be able to complete the 5500. They should also be able to file their own 1040 - but look how many use professionals... they are afraid to make a mistake and it will cost them money.

Sad part is many plan sponsors who do their own 5500s get in trouble with IRS and DOL.

[could be me maybe not]

"They should also be able to file their own 1040"

Well, I complete my own 1040. But if I had complicated stuff I would pay for help. I think the same should hold true with a 5500. Simple filings should be self-doable. More complicated issues you need to pay for expertise.

"Sad part is many plan sponsors who do their own 5500s get in trouble with IRS and DOL."

But why should we let these agencies, that work for us, abuse good honest effort? Who was appointed God and set penalties at $1,200/day?. Who was the General Secretary of that junta? Why should taxpayers stand for that abuse?

[E as in ERISA]

Welcome to the real world!

Actually, I think that alongside the Social Security reforms, there should be a parallel effort of equal or greater magnitude to signficantly simplify all the qualified plan rules and make sponsorship of plans not such a hazard for employers.