Form 5500-EZ Question

[Vlad401k]

I have a couple of questions regarding the filing of Form 5500 for one participant plans that I have not been able to find the answer to.

1) If a plan had more than one participant (besides the owner's spouse), in the prior years, what happens when the plan turns into a one participant plan in future years? For this example, let's assume that the plan assets are under the $250,000 Form 5500-EZ limit. Does the plan still have to file the Form 5500-EZ?

2) Assume the same scenario as Question 1, but the plan assets are over $250,000. Let's say the at the beginning of 2015, there were more than 1 participant, but at the end of 2015, there is only 1 participant. Can the plan file Form 5500-EQ for 2015 or do they have to wait until 2016 (when the beginning year participants number will be 1)?

Thank you.

[Lou S.]

The second one is an easy answer - you have to wait to 2016 to file the EZ.

The first one I think once you have a filing requirement you continue to have one even if you now would qualify of the exemption because you are under $250K. I'm 99% confident that was the rule when the 5500 limit was $100K but they may have changed the rule when they raised the limit to $250K and i missed that part.

[NJ Mike]

From the IRS instructions for tje 2015 Form 5500-EZ:

You do not have to file Form 5500-EZ for the 2015 plan year for a one-participant plan if the total of the plan's assets and the assets of all other one-participant plans maintained by the employer at the end of the 2015 plan year does not exceed $250,000, unless 2015 is the final plan year of the plan. For more information on final plan years, see Final Return later.

[chc93]

One other note... Since in the prior years there was another participant, I assume you were electronically filing the 5500.

For one of the plan we have, the 5500 was electronically filed while there was the other participant. When the other participant terminated and we only had the owner/spouse, we continued to file the 5500 electronically, but with the "one-participant plan" box checked.... which essentially makes the 5500 an EZ (many 5500 questions are not required, and the 5500 is not on the public efast website).

We did this since we thought that if we stopped electronic filing, a flag would be raised somewhere that the 5500 was not filed (or timely filed), even if the EZ was filed directly with the IRS, and we might have to spend time getting this straightened out. We haven't had a problem with this yet.

[BG5150]

I agree with chc93. It will probably be easier to still file the 5500-SF (with the 1 ppt box checked) than risk filing an EZ, or no filing at all.

Unless there are wacky investments, the 10-15 minutes a year you'll use preparing the form will be a lot less frustrating that tryin to deal with the IRS or DOL trying to explain why there was no filing.

[Mike Preston]

The IRS is much better now than it has been in the past viv-a-vis dealing with this issue. *IF* they decide to inquire about a missing form the form they send allows one to check one of the canned reasons there was no filing and send it back. It really isn't a big deal.

[chc93]

I don't think I heard of this... but if you stop filing a 5500-SF electronically and switch to a paper EZ filing directly with the IRS, will the DOL/EFAST send a letter of late filing or non-filing?