No Assets, No 5500

[Guest MS TPA]

Hey Guys,

Could someone please provide the reference for the Regs on No Assets, No 5500 Required? I have a plan w/a 09/01/09 effective date but because the owner became ill did not hold open enrollment or fund their new plan last year. We'll be changing the effective date to 2010 and I need to reference the Regs for the client.

Thanks!

[Kevin C]

Here is a recent similar question:

http://benefitslink.com/boards/index.php?showtopic=45372

[Guest MS TPA]

Here is a recent similar question:

http://benefitslink.com/boards/index.php?showtopic=45372

Thank you for your response............Okay, that was my first line of thinking; however, I was advised differently by a Senior Compliance advisor. He maintains no assets, no plan and has offered no supporting documentation. Does anyone have anything that would support No assets, no plan, no 5500?

Thanks!

[austin3515]

I believe it has to do with trust law, and something about having to have a "corpus" to be anything. So with no money, there's no trust. Maybe a state law thing?

[Kevin C]

So, a failure to follow the terms of a plan document that is both signed and effective means the plan doesn't exist? I don't buy it.

[K2retire]

So, a failure to follow the terms of a plan document that is both signed and effective means the plan doesn't exist? I don't buy it.

The plan exists -- but there are no assets to report on a 5500. They are different issues.

[Guest Sieve]

Filing is required. At least, that's my opinion. ( . . . unless, as some misguidedly suggested in the string referenced by Kevin C, you want to make the plan "go away".)

The instructions require a plan to file a 5500 if it is covered by ERISA. An "employee benefit plan" is covered by ERISA. (ERISA Section 4(a)). But, an employee benefit plan (except for one minor exception) does not include any program "under which no employees are participants." (DOL Reg. Section 2510.3-3(b).) So, your inquiry is to determine whether there were employees who were participants in 2009. If so, filing is required for 2009.

For this purpose, an employee is considered a participant on "the date designated by the plan as the date on which the individual has satisfied the plan's age and service requirements for participation". (DOL Reg. Section 2510.3-3(d)(ii)(A)(2).) So, even though there may be no funds in the trust--and, by the way, a trust can exist without any corpus--the plan will be obligated to file a Form 5500 if employees are "participants" in 2009 pursuant to the terms of a plan established for 2009, even if they are not deferring and even if no employer money was contributed. My guess is that your plan had participants pursuant to its terms in 2009.

[Mike Preston]

And to add a little anecdotal information, I once shared the podium with a representative of the DOL where this question was asked. The DOL representative made it clear that a 5500 filing was definitely required. Is the risk of a $15,000 penalty enough to encourage the filing of an almost empty 5500? It is in my neck of the woods.