Timing of 5500 filing

[Guest NPS Darren]

I have a client that has not funded their PYE 12/31/08 Profit Sharing, do I need to put their plan on extension or can I file now. Their corporate return is on extension so my thought is that we can go ahead and file the 5500 today without putting on extension.

How do you handle this situation?

[rcline46]

You have several problems. If you are signing for the client you can file today, if the client must sign then you have to mark the 5500 for extension and include the corp extension.

If you normally file on an accrual basis, then you have a change in accounting which you must disclose. If you normally file on a cash basis then you are ok.

I would put on extension anyway, but check the rules to make sure you are not too late to get a 5500 extension!

[WDIK]

Save yourself the subsequent headaches and file for an extension.

[Guest NPS Darren]

Save yourself the subsequent headaches and file for an extension.

We did put on extension, the client will fund the 2008 Profit Sharing on or before 09/15. They are not filing their corporate tax return until 09/15.

Anyone have any thought on when we can file the 5500, do we have to wait till they fund the Profit Sharing contribution; which will be around 9/15. I did file the automatic extension form 5558 on Fri. 7/31.

[WDIK]

Save yourself the subsequent headaches and file the return after the contribution has been verified.

[Guest NPS Darren]

Save yourself the subsequent headaches and file the return after the contribution has been verified.

We are already planning on waiting but I just was hoping that someone might know if we can file the 5500 before they deposit the Profit Sharing contribution.

[Bird]

You can file before the contribution is made. Most people have probably been burned at least once by a client who absolutely, positively will make a contribution - then they change their mind, hence the warnings to wait until the contribution is deposited. Me, I'd rather get the return out and take a slight risk that the client will change his mind than have the return sitting here, with the possibility that it will get lost in the system or something - but it does depend on the client somewhat.

[Guest NPS Darren]

You can file before the contribution is made. Most people have probably been burned at least once by a client who absolutely, positively will make a contribution - then they change their mind, hence the warnings to wait until the contribution is deposited. Me, I'd rather get the return out and take a slight risk that the client will change his mind than have the return sitting here, with the possibility that it will get lost in the system or something - but it does depend on the client somewhat.

So, is there no DOL or IRS regulations that would prevent you from filing form 5500 prior to the deposit of an accrued contribution. In this case we are talking about a 2008 Profit Sharing contribution that will not be deposited until 09/15/09. The corporate tax return is on extension till then. Can we without any issue or penalty file the 5500 now???

[WDIK]

You can file, but what is the downside of waiting?

[Bird]

The downside of waiting is that it's just one more thing to keep track of, and potentially get lost or overlooked or whatever. That may sound dumb, since our job is precisely that, to keep track of things and all that, but in my life, things get messed up when I'm done, but waiting for someone else to do something. I'd rather do an amended report/return once every 100 times than deal with an unfiled return once every thousand times. I'm not arguing that everyone should do it that way, but there are pros and cons to be weighed. We won't finish a val and print the tax return until we've been assured of the contribution amount, and once we're past that point I don't want to be holding onto it for any reason. To each his own.

[Bill Presson]

The downside of waiting is that it's just one more thing to keep track of, and potentially get lost or overlooked or whatever. That may sound dumb, since our job is precisely that, to keep track of things and all that, but in my life, things get messed up when I'm done, but waiting for someone else to do something. I'd rather do an amended report/return once every 100 times than deal with an unfiled return once every thousand times. I'm not arguing that everyone should do it that way, but there are pros and cons to be weighed. We won't finish a val and print the tax return until we've been assured of the contribution amount, and once we're past that point I don't want to be holding onto it for any reason. To each his own.

I agree with this. Another downside of waiting is we bill when the 5500 is out the door.

[WDIK]

We won't finish a val and print the tax return until we've been assured of the contribution amount, and once we're past that point I don't want to be holding onto it for any reason.

So if you don't complete the return until you have verified the contribution, you don't run into the scenario from the original post anyway. We try to follow this approach.

I agree that this isn't a big deal either way and one should do what is within one's comfort zone.

[Below Ground]

I think it is important to note that the contribution must be deposited by the due date (with extensions) of the tax return. You don't have to wait to file that tax return. You don't have to wait to file the 5500 either. I do agree that the "burned comment" of Bird, who I also agree with on whether to hold or file, is worth consideration. But then again, what do I know.

[John Feldt ERPA CPC QPA]

Isn't that tag line reserved for another user?

I think if the company is not-for-profit (or a government), then the deposit would be due on the 15th of the 10th month after the end of the plan year, regardless of whether they file any return at all or do an extension.

[Below Ground]

J4FKBC - Hmmm, I think you are right! I didn't even think about that. I said it not so much as a "tag" as a "here's my two cents" for what it is worth.

The "not for profit question" has, in my experience, been subject to heated debate. I'm not sure which is right with 3/15 versus 9/15 versus 10/15 versus 12/31 (all for calendar). I tend to agree with the 9/15 date as I believe that ties into the IRC 415 Limits.

[John Feldt ERPA CPC QPA]

If 404 does not apply (gov. sponsor or nonprofit),

in 1.415©-1, you find:

Date of employer contributions ... If ... contributions are made by an employer exempt from Federal income tax (including a governmental employer), the contributions must be made to the plan no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year (as applicable, depending on the basis on which the employer keeps its books) with or within which the particular limitation year ends...

The safe harbor contribution deadline is twelve months after the plan year end, but if made after the above date, the contribution would be an annual addition for year in which contribution occurred instead of the year for which it was made.

To me, that's October 15 for a calendar year.