Delinquent 5500s, 5500-EZ and SF's Across 18 Years

[JMH ERISA]

Small plan is filing a delinquent 5500 for years 2002-2008, delinquent 5500-EZ's for 2009-2012 and 2018, delinquent 5500-SF's for 2013-2017, and will file a timely 5500-SF for 2019. Essentially, this company downscaled after 2008 but continued operating with a few part-time employees each year since then. There were some years where only the business owner & spouse were eligible & covered under the plan. 

I think this plan will need to file under both the DFVCP and the 5500-EZ late filer programs and pay the maximum fees under both programs. Is there any way around this?

Also, is there a good way to indicate on the 5500-EZ and/or the 5500 & 5500-SF's to explain the gap in filings when it is switching back and forth between ERISA and non-ERISA filings?

[Peter Gulia]

Is this a defined-benefit plan or an individual-account (defined-contribution) plan?

 

About the years for which you suppose the plan had no participant beyond the owner and her spouse:

 

Was there a former employee who had an accrued benefit, even if not yet nonforfeitable, more than $0.00?

 

Did 2008/2009 or 2017/2018 have a partial termination?  If so, does it affect the administrator’s count of whether there was a participant beyond the owner and her spouse?

[Bird]

19 hours ago, JMH ERISA said:

Also, is there a good way to indicate on the 5500-EZ and/or the 5500 & 5500-SF's to explain the gap in filings when it is switching back and forth between ERISA and non-ERISA filings?

I can't think of a normal scenario where this would happen.  Either the part-timers are in the plan or they are not.  Does anyone other than an owner(s) have a balance?  Are the others "participants" or are they "employees?"

[RatherBeGolfing]

1 hour ago, Bird said:

I can't think of a normal scenario where this would happen.  Either the part-timers are in the plan or they are not.  Does anyone other than an owner(s) have a balance?  Are the others "participants" or are they "employees?"

Small business operating with the owner and a few part timers could run into this issue with some turnover among the part timers.

[Bird]

4 hours ago, RatherBeGolfing said:

Small business operating with the owner and a few part timers could run into this issue with some turnover among the part timers.

I get how it could happen but unless either the plan is written poorly, with less than 1 year (or 2; we don't know what kind it is) eligibility, or they have employees working a year, entering the plan, then leaving, then doing the same with someone else, I don't see it likely to be switching back and forth.  Just sayin'.

[EMoney]

Just thinking off the top of my head--have not done any research whatsoever. Now, you are allowed to file an SF version even for a 1 life plan that would qualify for an EZ filing. I cannot recall if that was the case back in 2009-2012 but, if it was, couldn't you choose to file an SF for those years which would allow you to only pay the DFVCP penalty?

[JMH ERISA]

10 hours ago, Peter Gulia said:

Is this a defined-benefit plan or an individual-account (defined-contribution) plan?

 

About the years for which you suppose the plan had no participant beyond the owner and her spouse:

 

Was there a former employee who had an accrued benefit, even if not yet nonforfeitable, more than $0.00?

 

Did 2008/2009 or 2017/2018 have a partial termination?  If so, does it affect the administrator’s count of whether there was a participant beyond the owner and her spouse?

It is an individual-account (DC) plan.  The former EE accounts were all closed in 2008, and they literally had no other eligible employees for the years I mentioned for the EZ's. This is a limited project (5500 work only) so we are not doing a full compliance review for the entire 18 years; assume no partial termination that would change the counts.

[JMH ERISA]

9 hours ago, Bird said:

I can't think of a normal scenario where this would happen.  Either the part-timers are in the plan or they are not.  Does anyone other than an owner(s) have a balance?  Are the others "participants" or are they "employees?"

Thanks, their plan had a 6-month eligibility requirement and none of the part-timers met this requirement during the 5500-EZ years I mentioned, and all the former EE accounts were paid prior to the end of 2008.  The plan covered literally only the owners in some years.  Then after a few years they had a PT employee did qualify so that's when the 5500-SF's would start up again... until that EE left with zero balance and no one else qualified... then the one EE was rehired after a couple of years so here we are again with the SF for 2019.

[JMH ERISA]

2 hours ago, EMoney said:

Just thinking off the top of my head--have not done any research whatsoever. Now, you are allowed to file an SF version even for a 1 life plan that would qualify for an EZ filing. I cannot recall if that was the case back in 2009-2012 but, if it was, couldn't you choose to file an SF for those years which would allow you to only pay the DFVCP penalty?

Thanks, I did check into that. The delinquent filer program for 5500-EZ's is very specific that a 5500-SF cannot be filed for the late years. It must use the 5500-EZ, paper version.

[Bird]

And if I might ask, when did the plan cross the $250K threshhold for one man filing?

[JMH ERISA]

6 hours ago, Bird said:

And if I might ask, when did the plan cross the $250K threshhold for one man filing?

In 2009

[C. B. Zeller]

https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/dfvcp.pdf

Q6. Is participation under the DFVCP available to all Form 5500 Series filers?

No. The relief under the DFVCP is available only to the extent that a Form 5500 is required to be filed under Title I of ERISA. If annual reporting for a plan is only required under the Internal Revenue Code, it is not eligible for penalty relief under DFVCP. However, IRS penalties may still apply. For example, plans covering only self-employed individuals, sole owners (and their spouses) or partners (and their spouses) are not subject to Title I of ERISA. Such plans electing to file Form 5500-SF with EFAST2 instead of filing the Form 5500-EZ with the IRS are not eligible to participate in the DFVCP program. Plan administrators may call 202-693-8360 if they have questions about whether the program applies to their filings.