5500 problem

[SRP]

I am soon starting a 5500 clean-up project would like to receive suggestions on an approach from anyone who may have experience with a similar problem.

A plan was a Profit Sharing plan through 2005. The employer then set-up a new 401(k) plan for 2006. The 401(k) has assumedly been administered correctly (albeit independently) since 2006 including filing of Form 5500 but only on the 401(k) plan assets.

No further administration (including 5500 filing) has been completed on the original Profit Sharing Plan.

Is it advisable to treat this as an amendment of the PS plan at the time of the establishment of the 401(k) plan and then deal with this in terms of a need to file amended form 5500's that would now include the assets of the PS plan.

If this is not advisable then is it true that the proper approach is to utilize the Delinquent Filer program for the PS plan 5500's?

Any help is appreciated.

Thank you very much.

[JanetM]

Kind of hard to call it amendment of PS plan when all the k funds went to new trust accout (my assumption). If you set up new plan with separate recordkeeping for just the 401K funds then Delinquent filer program is what you need to do for PS.

If they sent the 401K funds to same trust accout that had the PS, you could try and self correct by amending old PS returns to show the PS and 401K assets. Plan sponsors, especially of small plans, can really mess things up.

[Guest Sieve]

May depend on the plan number used in the 5500 filings . . .

If 401(k) has a different plan # from the PSP--which I assume is the case or there would not be a lack of filing for the PSP--then clearly you cannot amend returns for a different plan #, especially when the newer plan was not intended as an amendment of the old plan (which it should say in the plan's introductory sections). DFVCP is so cheap & safe ($1,500 max for small plan), I'd use it in an instant. No brainer (in my mind).

If you've been filing the 401(k) under the same plan # as PSP, then you maybe can take the position that the plan is the same as the old plan, just with different custodians (although the Trustee designation may cause a problem with the old plan). But, in that case you should be able to file amended returns to include all assets (since the plan # has not changed). The fact that the 2 parts of the plan (401(k) & PS) have different custodians is certainly not unusual, in and of itself.

[ERISAnut]

I think the document will primarily govern whether the 401(k) is an amendment of the PS plan. Each document (at least adoption agreements) poses the question of whether it is a new plan or restatement of an existing plan. If it is a restatement of an existing plan, you will list the plan name and also the original effective date. If it is a new plan, then you will select the new plan option.

I am speaking primarly of adoption agreements. So, there should be no question as to whether this was a new plan or a restatement of the profit sharing. Just find this provision on your document.