Waiver of IRS LOD Filing Fee and startup plan tax credit

[CharlesLeggette]

1. A 412 e plan is restated as a Cash Balance Plan. 1 person plan. Do they get a waiver of the 5300 $1,000 fee??

2. A new Cash Balance Plan covers 1 person. Do they get a waiver of the 5300 $1,000 fee??

3. New Plan startup tax credit -- does number 2 get the tax credit for starting a new plan???

[John Feldt ERPA CPC QPA]

Is the one person an HCE? Probably is, right, so then the fee applies: the small plan IRS-user fee exemption does not apply if the plan has no NHCEs. The 5300 user fee is actually $2,500 (it used to be $1,000 a while back).

Why would you put a one person plan into a cash balance document?

If the 1-person is a non-HCE then it depends on how old the plan is to determine whether or not it has to pay the user fee.

[rcline46]

I have put in a cash balance plan for a single HCE plan - if incomes vary wildly the a percent of pay plan allows contributions to vary with pay.