SF or EZ

[ombskid]

Plan has 4 former participants (no longer employed) and one owner at 12/31/2008. The former participants are paid out in early 2009, leaving only the owner.

For 2009 does this plan qualify as a " One participant Plan" and allowed to file 5500 EZ for 2009?

If so, and it has less than $250 k in assets is it exempt from filing the EZ?

[Bird]

Not eligible for an EZ filing. I took a quick look in the instructions and couldn't find phrasing to clarify that to be eligible to file an EZ, it has to cover the owner(s) only for the entire year, but that is pretty well understood.

[Tom Poje]

that's what I had been taught but...

there is the rather cryptic 5500 EZ instruction under the title EFAST2 Filing system which says a one-participant plan may satisfy the filing obligation by filing a 5500-SF instead of 5500 EZ provided the plan covered fewer than 100 participants at the beginning of the year.

and then even more confusing is the statement that one participant plans that covered more than 100 participants as of the beginning of the year are not eligible for the 5500 SF and MUST file the 5500 -EZ

now explain that one to me! that really goes against everything I would have imagined.

[ombskid]

I was thinking that for some purposes terminated employees were not considered "covered"...

i.e. a plan only covers eligible employees

[bevfair]

For 2010 - would this plan now qualify to file 5500 EZ since all other participants were paid out during 2009? And if the assets that remain in the plan are less than $250,000, is an EZ even required? ie no filing needed at all?? I seem to recall that you couldn't go from filing a 5500 to not filing at all but that was many years ago and now can't find anything to support that.

[Bird]

IMO no return at all is required, but it will definitely generate a "missing return" letter, eventually. I don't know if it is true now or not but I think the letters used to have a box you could check that said something like "this is now a one man plan with < $250K so a return is not required." You have to decide if responding to that letter is easier than just filing an EZ (I do think they recognize if a filing goes from regular to EZ so that course should not generate a letter).

[Guest sca1079]

I have a plan that filed an SF last year and this year is going to file an EZ... (only the owner/spouse remain in the plan, all other participants terminated and were paid out prior to the beginning of the plan year).

Do I need to mark 'first return filed for the plan' on the EZ?

Also, the plan is/was PBGC covered, however, I see that there is no plan characteristic code '1G' on form 5500-EZ... I suppose it will be OK if I leave code 1G off the form?...

[mwyatt]

On the PBGC issue, seems reasonable to assume that eligibility for use of 5500-EZ means not subject to Title IV coverage, hence no coverage characteristic code. However, a hypothetical 50 partner law firm that inexplicably has zero employees other than partner spouses can file an EZ, but could be over the 25 participant threshold for PBGC exemption (although I'd be hard pressed to find such a partnership in the wild).