Terminated Plan-All assets distributed, then check returned

[RTB]

Plan terminated and all assets distributed in December, 2016.  I have not filed a 2016 5500SF yet, because in March of 2017, a  distribution check was returned and deposited into the Plan's investment account.  My question is how do I handle the 2016 return?  Do I file a final filing for 2016 and then amend the 2016 return without marking "Final Return" or do I file the 2016 return originally with zero assets, but not marked "Final"?

[K2]

I would file a 2016 as not final and with an asset amount equal to the returned check (i.e., it's a receivable).  

[RatherBeGolfing]

1 hour ago, kcbirm said:

I would file a 2016 as not final and with an asset amount equal to the returned check (i.e., it's a receivable).  

Yep, that is exactly how I would do it.  You know it is coming back, so at the end of the year it is a receivable.

[RTB]

Thanks everyone-do I show this as a positive distribution on the forms?

[K2]

No, it wasn't distributed.

[Earl]

I think it was distributed.  if you don't cash your paycheck it is still taxable.

I would file 2016 as the final.

I would have no problem explaining what happened after the fact - a check was re-issued.

[Tom Poje]

I think it depends on all the facts

we had a plan pay everyone out late December. assets were 0.

then a small gain showed up in January, but that was promptly paid out. we treated as if it was a 'payable' {opposite of a receivable)

if it makes sense to include a receivable on an accrual basis for filing I don't see why a payable can't be treated the same. but then the amount was small, etc.

[Kevin C]

If your final 5500 shows assets and a liability for the uncashed check for net assets of zero, you will probably hear from the IRS.  We had one like that get selected for their terminated plans project. They initially insisted we amend the final return to not be final and file a final return for the following year.  At that point, the following year return would have been late.  It worked out ok in the end, but it was a pain.  In your situation, I would rather file as not final for 2016 and file a final return for 2017 for several plans than take a chance on having to deal with the IRS again for one plan.

[bonavito44]

I had occasion to call the DOL Office of the Chief Accountant regarding post-year transactions for a final Form 5500 -SF filing.

A terminated plan had issued $159k of checks for a rollover that did not clear on 12/31/16, but did clear in January 2017. They advised me to file a final, showing a payable that offset the cash on hand, thus reducing the net assets to $0. They also recommended attaching a letter of explanation with the EFAST filing.

They said I might get a warning, but not an error.

EFAST filed yesterday, Received a warning, but the filing was accepted.

So far so good.

 

Hope this helps.

[My 2 cents]

On Friday, May 26, 2017 at 1:00 PM, Earl said:

I think it was distributed.  if you don't cash your paycheck it is still taxable.

I would file 2016 as the final.

I would have no problem explaining what happened after the fact - a check was re-issued.

Rollover or cash payment, a 1099-R should have been issued.  I agree with saying it was distributed.

[jpod]

I wouldn't lose a minute's sleep over this:  All assets were distributed by year-end, so it's a final 5500.  This, in my view, is entirely different from trailing dividends, etc., which you know are coming post-year-end.