5500 Filing Exemption

[Guest JROSSITTER]

This (one person plan)exemption is not available where the business sponsoring the plan is a member of a controlled group (see 5500 EZ instructions). This appears to make the exemption unavailable to an individual who has plans for 2 separate sole proprietorships even the aggregate assets are < $100,000--or am I missing something? If an individual has plans for a sole proprietorship and a 50/50 partnership, however, could the exemption apply for each even though the aggregate assets exceed $100,000?

John Rossitter

[Gary Lesser]

There are those that do not believe an individual can have but one sole proprietorship (although I do not agree when the business are totally different). Does the accountant file two schedule Cs? The Schedule C instructions seem to suggest that a sepatate form is required for "each" trade or business. Are the businesses in some way treated separately?

The 50/50 group is not controlled because of the more than 50% rule (IRC 414). However, the entities could be affilliated under subsections (m) and (o) of Code Section 414.

[Guest JROSSITTER]

Gary--Thanks for taking the time to reply.

I agree that an individual can have 2 separate sole proprietorships and that each could have its own plan(s).If so,they would clearly be a controlled group, and, as I read the IRS instructions, the one-person plan filing exemption would not apply, even if the aggregate plan assets were less than $100,000. Do you agree?

I also agreethat the sole proprietor/partnership scenario is not a controlled group. If it is also not an affiliated service group, it appears to me that the plan(s)of the sole prop and/or the partnership could qualify for the one person plan filing exemption, even if the aggregate assets of all exceed $100,000, as long as the plan assets of one or both entities are less than $100,000 (ands all other requirements are met). Do you agree?