Controlled Group and 5500

[HarleyBabe]

Have a two companies with identical owners. Both owners own 100% of each company. The second company therefore adopted the first companies plan. They fund separately but to the same institution. Is it one 5500 filing for the group or two 5500's, one for each company?

[J Simmons]

One 5500 per plan.

[HarleyBabe]

One 5500 per plan.

So, at the risk of sounding like an idiot, you say one per plan. It's one plan, two sponsors. So only one 5500?

[WDIK]

Unless I'm misunderstanding the original post, I think there should be one Form 5500 with code 3H for controlled group on line 8a.

[HarleyBabe]

Unless I'm misunderstanding the original post, I think there should be one Form 5500 with code 3H for controlled group on line 8a.

So if I'm preparing one set of tax forms, for the 5500, I obvioulsy don't check single employer plan, correct? Also, which sponsor do I put on the form the original adopter?

[WDIK]

From the Form 5500 instructions:

"A 'controlled group' is generally considered one employer for Form 5500 reporting purposes. A 'controlled group' is a controlled group of corporations under Code section 414(b), group of trades or businesses under common control under section 414©, or an affiliated service group under section 414(m)."

In addition, be cautioned that the Form 5500 instructions also indicate the following:

"A separate Form 5500, with box A(2) checked, must be filed by each employer participating in a plan or program of benefits in which the funds attributable to each employer are available to pay benefits only for that employer's employees, even if the plan is maintained by a controlled group."

Is that sufficiently confusing?

(As a cautionary note, just because each entity funds separately does not necessarily mean that those funds are only available for that employer's employees.)

[HarleyBabe]

From the Form 5500 instructions:

"A 'controlled group' is generally considered one employer for Form 5500 reporting purposes. A 'controlled group' is a controlled group of corporations under Code section 414(b), group of trades or businesses under common control under section 414©, or an affiliated service group under section 414(m)."

In addition, be cautioned that the Form 5500 instructions also indicate the following:

"A separate Form 5500, with box A(2) checked, must be filed by each employer participating in a plan or program of benefits in which the funds attributable to each employer are available to pay benefits only for that employer's employees, even if the plan is maintained by a controlled group."

Is that sufficiently confusing?

(As a cautionary note, just because each entity funds separately does not necessarily mean that those funds are only available for that employer's employees.)

yes, very confusing, what would you do? One or two forms?

[Leopurrd]

perhaps this helps:

(From the 5500 instructions)

Box A(2). Single-Employer Plan. Check this box if the Form 5500 is filed for a single-employer plan. A single-employer plan for this Form 5500 reporting purpose is an employee benefit plan maintained by one employer or one employee organization.

Box A(3). Multiple-Employer Plan. Check this box if the Form 5500 is being filed for a multiple-employer plan. A multiple-employer plan is a plan that is maintained by more than one employer and is not one of the plans already described. Multiple-employer plans can be collectively bargained and collectively funded, but if covered by PBGC termination insurance, must have properly elected before September 27, 1981, not to be treated as a multiemployer plan under Code section 414(f)(5) or ERISA sections 3(37)(E) and 4001(a)(3). Participating employers do not file individually for these plans. Do not check this box if the employers maintaining the plan are members of the same controlled group.

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Just to chime in, in my world, most plans operate on a prototype plan. Most prototypes include controlled group members automatically and therefore there is only one plan for a CG and one 5500. I think that 2 5500's are filed in error and there should only be one. Now, if the two plans adopted the same document but were NOT a CG, you would file a 5500 for each plan.

Vicki

[J Simmons]

If it is a CG and one plan, then one Form 5500, coded a single employer plan; one testing of the CG.

If it is not a CG, but two or more 'unrelated' ERs adopt one and the same plan all the assets of which are available to pay the benefits claim of any eligible employee, then one Form 5500, coded as a multiple employer plan; separate testing for each of the 'unrelated' ERs.

If is not a CG, but two or more 'unrelated' ERs adopt one and the same plan, but the plan assets are not all available to pay the benefits claims of every eligible employee but there is 'separate' funding, then a separate Form 5500 for each separate fund of plan assets; separate testing for each of the 'unrelated' ERs.

[HarleyBabe]

If it is a CG and one plan, then one Form 5500, coded a single employer plan; one testing of the CG.

If it is not a CG, but two or more 'unrelated' ERs adopt one and the same plan all the assets of which are available to pay the benefits claim of any eligible employee, then one Form 5500, coded as a multiple employer plan; separate testing for each of the 'unrelated' ERs.

If is not a CG, but two or more 'unrelated' ERs adopt one and the same plan, but the plan assets are not all available to pay the benefits claims of every eligible employee but there is 'separate' funding, then a separate Form 5500 for each separate fund of plan assets; separate testing for each of the 'unrelated' ERs.

thank you, that's what I needed.