Form 5500

[jala]

Solo 401(k) plan (owner and spouse) went over the $100,000 threshold in 2006 so a return was filed.

Their balance is now greater than $100,000 but less than $250,000.

Since the threshold is now $250,000, must I continue to file since I filed for 2006 or do I just stop since their balance is less than $250,000?

If you know where I can find this information, I would really appreciate it.

Thank You,

[Lori Friedman]

Take a look at P.L. 109-280, Sec. 1103(a). For years beginning after 12/31/06, a Form 990-EZ plan has no filing requirement if assets are $250,000 or less as of the plan year-end. I interpret this to mean that your plan isn't required to file a 2007 return, even though it filed in 2006.

The cynic in me, however, is guessing that if a plan's been filing under the old $100,000 threshold, and then stops filing because of the new $250,000 rule, the Dept. of Labor will issue a letter.

[Mike Preston]

Oh, ye (sp?) of little faith. The law has been changed. The law says don't file anymore. So, stop filing and if you get a letter, write a two paragraph response that says:

The law has been changed. We aren't responsible for filing a 5500.

OK, make that a 1 paragraph letter.

[Lori Friedman]

Suggested text for that letter:

You changed the law; I didn't. Leave me alone and let me get my work done.

[Guest dbvail]

This is a follow up with a slightly different fact pattern. I have read the instructions covering who has to file and am not comfortable with my interpretation.

Plan had a common law employee in 2006, so a regular 5500 was filed. That person has terminated and recieved no income in 2007. Assets under $250,000 over all.

If it had been a 5500-EZ in 2006, then no problem, no filing in 2007. But it was a regular 5500, and the instructions were not clear (to me anyway) if we can just stop filing.

Any thoughts are much appreciated.

Thanks

[JanetM]

If it were me, I would file the 5500 for 2007 showing a single participant. If the owner has no intentions of ever having employees again then 2008 you can swithch to (not) filing EZ. This would be easier to expain than simply switching to (not filing) EZ.