Solo 401k w/ Missing 5500's for Many Years

[austin3515]

We're going back and doing EZ's potentially to 2000!!

1) Is there a basis for only go back say, 6 years, based on the statute of limitations?

2) Is there any basis for just filing a bunch of 2009 forms with all of the various dates on them? I doubt that we'd even be able to track down say the 2002 form...

[Peter Gulia]

I’d be reluctant to advise a client to omit any year’s return based on a statute-of-limitations presumption. For the plan’s trust, it’s the act of filing a Form 5500 (including Schedule P for those years that called for it) that starts the running of the statute of limitations. Neither a three-year nor a six-year limitations period applies if the trustee hasn’t filed a return. IRC § 6501©(3). [With the right facts and circumstances, it’s possible for a trustee’s Form 5500 that omitted a Schedule P to start running a limitations period. See Martin Fireproofing Profit Sharing Plan and Trust v. Commissioner, 92 T.C. 1173 (1989). But I don’t know how one does it without any return at all.]

A client might consider omitting a year’s Form 5500 if she knows, or in good faith estimates, that plan assets were less than $250,000 or $100,000 at the relevant time. But despite that reporting relief, many plan trustees feel more comfortable filing a return to trigger the running of limitations periods.

Once a trustee (with the work of her trusty CPA) is reconstructing enough of the plan’s and trust’s records to file Form 5500 for some of the years, it’s not too much more work to pull together returns for all years. Moreover, looking at the year-to-year internal consistency of the whole timeline can be a practical way to spot errors or illogical estimates.

If the records are incomplete, I’d focus more energy on making the contribution numbers consistent with those shown in the business and individual tax returns. Along with this, I’ve seen returns in which the beginning and ending balances were disclosed as estimates, and the year’s investment gain or loss likewise was disclosed as an estimate interpolated as a subtraction of the contributions and the estimated beginning balance from the estimated ending balance.

[austin3515]

Any thoughts on doing it all on 2009 forms? To be sure the hardest part of this project will be finding the applicable forms. We actually have statements going back to 2000.

[Peter Gulia]

The fillable .pdf form on the IRS website allows typing dates in the first line.

In the clean-up situation that you describe, I'd use 2009 forms for the old years' returns.

[Tom Poje]

well Q-4 on the DOL list of frequently screwed up problems (or whatever) says:

since you indicated its a 401(k), I guess there are no attachments. but that would be for the EZ, and now the DOL doesn't take the EZ, so I don't know how you could follow the rules and submit on the current form available when the EZ isn't really available for 2009 for E fast 2. this all sounds like a plot by Dr. Evil to get back at you. There is nothing to stop you from filing a regular 5500, but then you have the attachments, which are to be from prior years.

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To submit a delinquent or amended Form 5500 return/report electronically through EFAST2 for plan years prior to 2009, you must submit the filing using current filing year Form 5500, schedules, and instructions except as provided below. The current filing year forms take the place of the Form 5500 pages that would have been included in the prior year's filings. The electronic filing on the current filing year Form 5500, however, must indicate, in the appropriate space at the beginning of the Form 5500, the plan year for which the annual return/report is being filed.

Exceptions to requirement to use current filing year schedules and instructions: Filers using EFAST2 must use the following correct-year schedules (that is, the plan year for which the annual return/report relates) completed in accordance with the related correct-year instructions:

Schedule B, SB, or MB (Actuarial Information),

Schedule E (ESOP Annual Information),

Schedule P (Annual Return of Fiduciary of Employee Benefit Trust),

Schedule R (Retirement Plan Information), and

Schedule T (Qualified Pension Plan Coverage Information).

For example, if you are filing a delinquent 2007 Form 5500 return/report for a defined benefit pension plan, you must include the 2007 Schedule B, Schedule R and all required attachments for these schedules. Attach them as pdf images to the current filing year Form 5500 (2009 or 2010 forms can be used as current filing year forms as of 1/1/2010), tagging them as "other attachments." Also, you have the option of using either the current filing year or the correct-year (2007 in this example) Schedule C. Since the Schedule E would not apply to a defined benefit plan, and the Schedule P and Schedule T did not apply for 2007 plan year filings, all other required schedules and attachments should be completed using current filing year forms and instructions. The entire filing should then be filed electronically in accordance with EFAST2 electronic filing requirements.

To obtain correct-year schedules and related instructions, go to this listing and print the schedules and instructions of the form year that corresponds to the plan year for which you are filing.

Important: Do not attach any Schedule SSA to any filing with EFAST2. Rather, submit the most current year Form 8955-SSA to the IRS (along with all required attachments). See www.irs.gov/ep for additional information.

Important: Do not send any penalty payments associated with a delinquent filing to EFAST2. Penalty payments to the IRS or made under the Department's Delinquent Filer Voluntary Compliance (DFVC) Program must be submitted separately in accordance with the applicable requirement.

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as a side note, though I haven't tried it, on FT William software, you would select your plan, then select the plan year, fill out the proper attachments, then the system converts everything to the e-fast 2 filing format

[austin3515]

I thought of that briefly, but ruled it out due to public disclosure...

We were speculating that perhaps the IRS would just file this giant pile of 5500's away and not do anything with it anyway...

[Peter Gulia]

My suggestion is based on an assumption that the business owner prefers to file Form 5500-EZ on old-fashioned paper.

In my limited experience, a paper filing not only reduces what information gets into the computers but also slows down the agency's processing of the return.

I've handled situations in which a taxpayer, even after responding to a specific deficiency notice, never heard from the IRS again - thus practically escaping several years' penalties.

[Tom Poje]

from Form 5500-EZ FAQs [Part II]

found at

http://www.relius.net/News/TechnicalUpdates.aspx?ID=518

When amending a Form 5500-EZ or filing a late Form 5500-EZ, what version of the Form 5500-EZ will a one-participant plan use for a late or amended filing?

The instructions are not clear as to whether the employer uses a current year form and inserts the appropriate dates or uses a correct year form. We recommend using a correct year form and filing the amended or late filing with the IRS.

[Bird]

I would give it a shot (using 2009 forms and changing the dates). It's not like they're going to do anything with the info anyway.