Extension confirmations

[SheilaD]

directly to our clients with instructions for them to attach it to form 5500. This is new (or rather old -- if you've been in the business a few years and remember when the IRS would send back a stamped copy of the 5558.). The 5558 form still says the extension is automatically approved.

Anyone else getting these or no anything about this seeming policy change?

Thanks

[WDIK]

We just saw our first one yesterday.

What a joy it will be to collect these from all of our clients to be attached to the filing.

[Guest TWoodward]

We have received a couple and have not heard anything about them prior to getting them forwarded from clients. For at least one of them, the 5500 has already been filed - so the extension was attached to the return, but not the notice. I wonder if we'll get a notice about that.

Has anyone heard anything from official channels about the change?

[mwyatt]

If so, this is actually a worse outcome than what we had before when we had to sign and get the approved extensions back. At least then, the approved 5558s would come back to the TPA; we're now talking about having to chase down each client to get a copy of the letter returned to ensure correct filing. Anyone at the IRS/DOL think about the logistics here?

[K2retire]

Anyone at the IRS/DOL think about the logistics here?

That's pretty funny. Why would the start now?

[SheilaD]

If so, this is actually a worse outcome than what we had before when we had to sign and get the approved extensions back. At least then, the approved 5558s would come back to the TPA; we're now talking about having to chase down each client to get a copy of the letter returned to ensure correct filing. Anyone at the IRS/DOL think about the logistics here?

Anyone at the IRS/DOL even THINKING

[Earl]

Trying to be serious for a minute:

I just got one from a client.

It says: "We received your 5558, and we have extended the due date."

"It is important (not "required") to attach a copy of this letter and a copy of your Form 5558, application for Extension of time to file an Employee Plan Return to your return when you file it. It will show the Department of Labor that we granted you an extension of time to file your return. If a copy of the extension is not attached to the return, it could (not "will") be processed as a late filed return."

So, I think we can ignore it for now (of course attaching it for those who bother to forward it to me).

And, I am considering putting my address on future 5558s, so if it turns out that this matters, I will get it.

Thoughts?

[mwyatt]

Problem is that the newest version of the 5558 doesn't provide for a 3rd party address. Are you contemplating substituting your address for the plan sponsor?

Someone in our office brought up the point that maybe they are targeting a random sample of extensions (I've only heard of one from 15 filed for 6/30/08 extensions, which I'm guessing is the first appearance of these letters). If so, that's even worse; do we have to contact everyone to see if by chance they received one of these approval letters?

Wish that this was publicized a little better by IRS, to say the least.

[Bird]

I've heard that the address on the form will be disregarded and that the letter will be sent to the address of record in the database.

I think in the end this will be much ado about nothing (the IRS letters are superfluous). I hope.

[Earl]

Are you contemplating substituting your address for the plan sponsor?

Yes I am, as an "administrative convenience" on the 5558 only.

Otherwise I fear we are looking at a lot of sound and fury, signifying nothing.

(It's just an idea. Got a better one? Collecting them from clients is a non-starter, in my opinion.)

[Jim Norman]

Collecting them from clients is a non-starter, in my opinion.)

As bad or worse than collecting them from clients, most clients call us when IRS sends them something regarding the plan. More wasted time that we should be wasting on generating informative PPA notices instead.

[Lori Friedman]

A couple of years ago, the IRS pulled this same stunt with Form 990 extensions. The IRS sent letters confirming that automatic extensions had been granted -- a ridiculous waste of effort, paper, and tax dollars. The letter also instructed each organization to attach a copy of the letter to its Form 990.

Some clients forwarded their letters to me; some didn't. That meant that some of the Form 990's included the letter, while other Form 990's were filed without it. Also, it's impossible to attach any extension documents to an e-filed Form 990, so the whole issue was moot for any organization that filed electronically.

There were absolutely no bad results or fallout from this matter. The bottom line -- I didn't lose any sleep worrying about the Form 990 letter, and I'm not concerned about this new Form 5558 letter.

[mwyatt]

Well, it gets even better with 5558s according to Relius this morning:

Relius Technical Update

Bad enough they made an error with the language on the approval letters, they are now sending out late filing penalties because you attached a post-2005 unsigned 5558 (ignoring the fact that the 1/07 revised Form 5558 specifically excluded the signature requirement except for filing 5330 extensions).

I'd keep this link handy as you'll need it to show to your clients that you know what you're doing...

[RCK]

We (large plan sponsor) merged a pair of small 401(k) plans out of existence on July 1, 2008. So final 5500's were due January 31, 2009 and extended to April 15, 2009. We were ready to file about March 27, but saw no urgency so did not get around to it until April 3. One of the 5558 approvals came in on April 1, and one on April 2.

If that first batch is an indicator of the future, we will think twice about filing early in the extension period.

[Mike Preston]

Ignore it. The IRS letter asking for a copy of the extension approval is a boo boo. Just attach the extension request (5558) as always. Be happy.

[mwyatt]

Mike, not sure you picked up on the Relius Technical Update. This problem is a magnitude worse, in that the IRS is kicking out late filing letters because the Form 5558 (redesigned in '07 so that you no longer signed if extending a 5500) was not signed (huh?). Have gotten a couple of letters so far on filings I know were timely filed with a filed extension. Another level of mistake.

[Mike Preston]

Separate issues and I agree with you that for the IRS to kick back a form that isn't signed when the instructions say not to sign it is.....a problem and for them to ask for small penalties when a postmark isn't clearly readable when a form is received within a day or two of the applicable deadline is.....a problem.

But neither one is triggered by the problem originally mentioned.

[Earl]

straying off topic but

A client received a penalty notice for $25 for late filing Form 5500.

I called the VRU at EBSA and they report receiving the 5500 on 10/23.

That would seem to indicate a 7 day grace period.

[jpod]

Earl: Alternatively, giving EBSA the benefit of the doubt, they actually looked at the postmark and it said Oct. 16.