Solo 401(k)-Never Funded-Terminating-Filing Required?

[jala]

Solo 401(k) plan was established 6/1/2013.

Trust ID was obtained.

The plan was never funded so balance has been $0.00 since inception.

Form 5500EZ never required to be filed since balance was under $250,000.

Client now wants to terminate the Plan.

Is a Form 5500EZ required to be filed as a FINAL since it is terminated even though the plan was never funded and Form 5500EZ was never filed in the past?

Thanks for any guidance.

[Bird]

Well...I wouldn't.

[Belgarath]

While I understand Bird's pragmatic and reasonable approach, I'll take the other side. Filing a 5500 for such a plan is so easy, that I'd go ahead and file just to keep it squeaky clean.

[WhoLetTheDogsOut]

I don't think I would file a 5500-EZ either. If there were plan assets involved, then, yes I probably would. However, I would make sure the document is current.

[jpod]

Why would you make sure the document is current? If the plan is "disqualified," so what? The only issue as correctly noted is whether to file a 5500-EZ. Why not take the 5 minutes to complete the form, file it and sleep at night?

[ETA Consulting LLC]

If a tree falls in the forest and no one is around to hear it, does it make a sound?

Good Luck!

[Tom Poje]

the version I heard was

If a man walks alone in a forest is he still wrong?

[GMK]

or if a man says something when he's alone, is he still wrong?

And the falling tree does make a terrific sound, so much so that it causes the bear in the woods to ...

[Lou S.]

the version I heard was

If a man walks alone in a forest is he still wrong?

I believe the answer depends on his wife.

[Bird]

Arggh. While I really, really hate to spend any time on this, I see absolutely no upside to filing; zero, zilch, nada. There is absolutely no chance of anything "bad" happening from not filing. It's not on a radar screen, anywhere. No deduction to justify, no nothing. If you file, you invite an inquiry of some kind - harmless, except for the fact that it will take time to answer. I wake up every day just hoping to be left alone for the day, and this runs counter to that thinking.

[Belgarath]

Hi Bird - believe me, I understand. If they had never applied for a Trust ID # I'd probably agree with you. But since there is one out there, the possibility exists that a cross-checking program will be instituted at some point, asking, "Where is your 5500 form?" Hence my extra caution. But that's just my paranoid work mentality. I don't actually think I'd be paranoid if everyone wasn't out to get me...

[austin3515]

I was uner the impression that a plan never existed if never funded. Something about there needs to be a "corpus" or something.

I would definitely not file personally. There is no plan by any (reasonable definition) to file for. Until there is money/liability involved, it's just a stack of paper...

[Soundbc1]

Agree with Austin. There was never a plan, without a valid trust.

[Mike Preston]

Yes, a 5500-EZ is required to be filed. Do you really want to be on the wrong side of an IRS inquiry on this when it can be so easily avoided by a simple filing? I think best practices is to tell the client it is required and if they decide not to file send them a formal "because you are not following our advice we are terminating our services and can't be held liable for bad stuff that happens to you" letter.