Signatures on Schedule P

[blue]

Janice Wegesin’s 5500 Preparer’s Manual states, enter the complete legal name of the corporate trustee, the names of all trustees, or the complete legal name of the custodian of the plan on line 1a of Schedule P. Usually one trustee is authorized to sign.

Someone in our office went to a seminar (cannot remember who sponsored it) and remembers hearing, if you have more than one trustee for the plan, separate Schedule Ps should be prepared for each trustee because it is not a good idea to have only one trustee sign.

Can anyone give me a reason why having only one trustee sign Schedule P would not be a good idea?

[Guest b2kates]

From a legal standpoint, no. If a trustee is authorized to sign on behalf of all the trustees, such signature would be binding on all.

Remember that the purpose of Schedule P is to start the statute of limitations running on the filing on Form 5500. Once the statute has run, it has expired, it has done so for all the named Trustees in relation to Form 5500.

Advice may have been belt and suspenders caution

[Ron Snyder]

I may depend on whether the individual trustees are X or Y or X and Y. If X and Y, both should sign.

[E as in ERISA]

In an IRS audit, it is generally going to look to the party signing the Schedule P to be the party to sign the consents to keep the statute of limitations open for the trust (which you would generally do in order to keep negotiations with the IRS open temporarily instead of having an assessment and then having to move to appeals). This can be a problem if the original signer is now hesitant to sign an IRS consent for you. Multiple Schedule Ps might provide more possible signers of the consent.

[namealreadyinuse]

I have never heard of multiple trustees signing and need to follow up on that I guess. Is that really your standard practice if there is more than one individual trustee?

[Calavera]

It maybe a case when the assets was transferred from one custodian to another custodian during the year.

[Ron Snyder]

Actually it's strange for the IRS to need to keep the statute of limitations open for the trust and not for the plan. The trust has no 990 to file. The plan filing duty is imposed on the employer, not the trust. Therefore, this situation is unusual.

Our practice is to name trustees as X or Y rather than X and Y so either can sign.

[Guest Dell]

This is how I look at it:

There should be only one Sch. P filed for each trust, that's in the instructions. Only one authorized fiduciary is required to sign the Sch P, also in the instructions. If there are multiple trust's in the plan, a separate Sch P is filed for each trust, and each of those Sch P's is signed by one authorized fiduciary.

[E as in ERISA]

Actually it's strange for the IRS to need to keep the statute of limitations open for the trust and not for the plan. The trust has no 990 to file. The plan filing duty is imposed on the employer, not the trust. Therefore, this situation is unusual.

Our practice is to name trustees as X or Y rather than X and Y so either can sign.

The trust is one of the three "taxpayers" subject to audit by the IRS -- and subject to payment of additional taxes if the plan is found to be disqualified upon audit. The trust would have to pay taxes on the earnings (the employer on unvested contributions; the employees on vested contributions). I agree the trust doesn't file a 990. The trust files the Schedule P with the 5500 in lieu of a 990 or 1041 or other filing. The Schedule P runs the statute of limitations for the trust. The trustee -- not the employer -- is the party signing that filing. The IRS will be on the employer's premises during the audit -- and negotiating with the employer. The employer will be contacting the trustee to try and get them to sign the consents to keep the statute open while the audit and related negotiations continue -- so that the IRS doesn't simply make an assessment and force them into an appeal situation.... Obstinance on the part of the trustee during this process can be a real concern.

[E as in ERISA]

This is the only purpose for which I've seen the Schedule P used: to determine who signs the consent to keep open the statute. I don't know that it has to be the same trustee that signed the Schedule P if there are multiple trustees and only one Schedule P. But it can make it easier.