2nd Year Plan w/ No Assets

[Guest notapensiongeek]

We set up a 401(k) plan effective 1/1/2004, filed a 2004 Form 5500 and Schedules (showing $0 assets at begininng and end of year), and filed a 2005 Form 5500 (also showing $0 assets at the beginning and end of year). There were 10 eligible participants, all of which worked more than 1,000 hours in each of those years.

It is our understanding that you are supposed to file, even if there were $0 assets, so we did.

We got a letter from the DOL on the 2005 filing asking for "clarification" (why was the "Trust" box checked on page 2 of the Form 5500, and please check your math on the Schedule I). We sent them a letter back explaining that there are no assets, but that there are plan participants. They sent back another letter asking for further clarification.

Has anyone ever run into this?

Any input would be greatly appreciated.

Thanks ;-)

[Guest Pensions in Paradise]

Just call the DOL reviewer and explain the situation again.

Now the more important issue. WHY is the plan still effective? I can understand the situation when no one participates during the first year, but if you still have zero participation after two years then its time to close the plan.