Can an ERISA plan become non-ERISA?

[Flyboyjohn]

401(k) plan covers sole owner and 1 common law employee, files 5500-SF.

The one employee terminates employment and is paid out this year so we will file an SF for 2015.

In 2016 can we contend the plan is now non-ERISA and not file anything if assets are under $250,000 or file an EZ or one-participant SF?

I guess my question is can a plan float back and forth between ERISA and non-ERISA from year to year or might the government contend "once ERISA, always ERISA"?

[ETA Consulting LLC]

The plain language of what constitutes ERISA is clear. So, when it becomes the case that the plan no longer covers anyone other than the sole owner, then it is not subject to ERISA. I'll go with that until the Government issues plain language to the contrary. There is no current language to suggest "once ERISA, always ERISA."

Good Luck!

[hr for me]

I know on other laws such as FMLA, there is a lookback year and then the new status applies. Not saying this definitely for ERISA though.

I do know that at some point if you file 5500's and stop filing without sending in a "final" 5500 or on quarterly 941 FIT/FICA forms to the IRS and you just stop filing that they will eventually come and ask you what happened to the missing ones. So you might try to see if you can mark anything on the last one that shows it is the last (at least for a while). It might save you some later heartache.

[ETA Consulting LLC]

Even PBGC status for DB plans is a 'once covered, always covered'. It just doesn't apply to ERISA. That is interesting. I would keep in mind that even though Forms 5500EZ aren't required in certain situations, I continue to make it a practice to take the few extra minutes to file them; keeping in mind that the 3 year Statute of Limitations is provided only to the extent the return is filed. So, there is value in continuing to file it; regardless of the asset level.

Good Luck!

[david rigby]

Even PBGC status for DB plans is a 'once covered, always covered'.

Nope. See PBGC Blue Books. Q&As 2000-16 and 2007-05.

http://www.pbgc.gov/prac/other-guidance/blue-books.html

[chc93]

I know on other laws such as FMLA, there is a lookback year and then the new status applies. Not saying this definitely for ERISA though.

I do know that at some point if you file 5500's and stop filing without sending in a "final" 5500 or on quarterly 941 FIT/FICA forms to the IRS and you just stop filing that they will eventually come and ask you what happened to the missing ones. So you might try to see if you can mark anything on the last one that shows it is the last (at least for a while). It might save you some later heartache.

We actually had that situation. Filed 2012 SF as "regular" in Feb 2013. Filed 2013 SF as "one-participant" in Mar 2014. Filed 2014 SF as "one-participant" in Mar 2015. Haven't heard from the IRS or DOL/EFAST... yet. All 5500-SF's before 2012 filed as "regular".

[BG5150]

As long as 5500's are filed, whether 1 participant or not, SF or EZ, using the same tax id and plan number, I think you are ok.

I agree with the above that says even if you are under $250k, still file the EZ.

Or, you can wait for the "you didn't file for 20XX" letter and explain it then. Probably take more time to put together a response (and a response to their response) than to just create the EZ, sign it and put a stamp on it.