Confusion about 5500-EZ instructions

[robbie]

I have a solo 401k with >$250k, so have to file. I have received contradictory advice on how to report contributions for, say, 2014, that are actually made in 2015. Some say that they should be included in calculating the end-of-year plan assets, rather than the actual balance on December 31. Others (including Fidelity) say to follow a cash balance rather than an accrual method and not include the deposits made in 2015 on the 2014 form. Another source said one follows a "modified" cash balance and therefor should include these contributions.

Is there any consensus on this. Which advice should I follow?

Thanks

[Mike Preston]

The form can be filed on a cash basis or a modified accrual basis (where the only accrual is for the contribution). It would be a very unusual 1 person plan that used pure accrual. Whatever you first use you should continue to use.

[robbie]

Mike,

Thanks for this prompt, clear, and helpful response

[Flyboyjohn]

Follow up:

Is it fair to assume that in determining whether the plan exceeds $250,000 at the end of the year it's OK to not include the accrued contribution?

So a one-participant plan with $240,000 on 12/31/2014 with a 2014 accrued contribution of $53,000 doesn't have to file a 2014 5500EZ?

[Bill Presson]

The form can be filed on a cash basis or a modified accrual basis (where the only accrual is for the contribution). It would be a very unusual 1 person plan that used pure accrual. Whatever you first use you should continue to use.

Mike,

Thanks for this prompt, clear, and helpful response

Mike, how many times in the last 30+ years have you gotten a response like that?

[Mike Preston]

Bill, precious few!

Flyboy, to the best of my knowledge the instructions don't specifically mention an exception to the general rules that forces one into modified accrual for the purpose of determining whether a form is required to be filed. I explain the alternatives and let the client decide whether to file or not. That is, whether to adopt modified accrual or cash basis reporting.

[Bird]

Is it fair to assume that in determining whether the plan exceeds $250,000 at the end of the year it's OK to not include the accrued contribution?

I say definitely. I much prefer the modified accrual method so things tie out, but you can clearly file on a true cash basis...and did it, once. Or I should say did NOT (file) since cash assets were under the threshold.