5500 Filing Issue

[Gary]

We have a pension client that informed us that their plan had 120k in it after it's first plan year that ended 12/31/2004.

We never prepared a valuation for 2004 and it appeared that the 120k may have been a rollover after the plan year.

We later learned that the 120k was actually made or reported to be made on 12/31/2004 (though it may have actually been made after 12/31/2004) and that even though we never did a valuation they took it as a pension deduction on their tax return, thus indicating that it was on behalf of their pension plan.

They went on to contribute 185k for the 2005 plan year.

We are now preparing the 2005 5500EZ.

Any suggestions as to how to file this return given that it is the first return being filed and there should have been a return for 2004?

Thanks.

Gary

[SoCalActuary]

It's none of my business if your "client" did not pay you to provide full and complete administrative services for the 2004 year.

How do you want to help this taxpayer?

Do you intend to maintain a funding standard account for 2004? Have you a service agreement to do so?

Will you cover their deduction issue for 2004 by providing adequate support for the business necessity?

Did they adopt the plan timely with a valid document from a vendor who got paid for the work?

[Blinky the 3-eyed Fish]

Remember you can file on a cash basis. If the $120k was made after the plan year end, then you had $0 assets on a cash basis and wouldn't require a filing.

[AndyH]

But then would you the need to refund part of your fee to the taxpayer?