Code 2E if 401(k)/SH Only

[austin3515]

Are you "required" to use Code 2E (Profit Sharing) if the only contributions that have ever been made are 401k and Safe Harbor? Or is it necessary to clarify that at its core it is a profit sharing plan. I always used 2E for 401k plans but I'm reviewing a 5500 for the prior provider and they are not using it. Should I tell them they are flat out wrong or let it be?

I'm thinking that it's probably ok to exclude it (they did indicate 2J and 2K).

[BG5150]

In the grand scheme of things, I would just let it go.

Have plan characteristics ever been noticed by an auditor before?

I think the codes are silly. They ask if the plan has a new comp PS schedule, but nothing about safe harbor. SH has been around for 15 years. You'd think the IRS/DOL would like to track how many safe harbor plans there are out there.

[Belgarath]

I'm nearly certain that I saw another posting on these boards within the last several months that indicated the IRS or the DOL has been checking these, and made plans refile for prior years if incorrect codes were listed. Don't recall if it was incorrect codes, or omitted codes, but it stands to reason that if they make you refile for 1, they will make you refile for the other.

[austin3515]

I let it go... It is ridiculous I agree. I still can't figure out why they want to know on the H how much Mutual Funds paid out in dividends. Or why for realized gains they make us come up with aggregate proceeds and cost basis. Are they using this data for ANYTHING?

[Belgarath]

Austin - I can't quickly find the post I was referring to (but I KNOW I saw it somewhere...) but here's another brief on on the subject I did find.http://benefitslink.com/boards/index.php?/topic/45859-plan-characteristicsfeatures-line-8a-of-form-5500/?hl=line

[BG5150]

Another silliness point:

Wouldn't the inclusion of 2A automatically mean 2E applies?

[austin3515]

Why not have one question: What type of plan is this? DB / PS / 401k (including PS w/ 401k) / Money Purchase / ESOP

And then ask about the other "characteristics" as distinct from plan type. Oh, if I were in charge!!

[Tom Poje]

the one post referred to (I am guessing) is
http://benefitslink.com/boards/index.php?/topic/52220-5500-plan-characteristics/?hl=codes#entry226021

but a thought. suppose the plan turns out to be top heavy. despite the fact you have no profit sharing option, technically you do because you have to have that hard coded into the document.