file two 5500s or one for successor entity

[thepensionmaven]

We have a partnership that incorporated mid year 1999. Under the old rules when IRS was handling the 5500s, we would have had to file a 5500C/R for BOTH entities, one closing out the filing for the partnership if the assets were taken over by the successor plan, and one for the new entity showing assets accepted by new corp.

This has always seemed like a tremendous exercise in wasting time, effort and paper, especially in lieu of question 3, "has the sponsorship changed".

In lieu of the fact that DOL not IRS is handling the forms now, don't you think we can just file one form under the name of the new entity showing the name and EIN of the old entity and call it an initial return and cut out all the extra (and now it really is EXTRA) paperwork and BS?

[Guest Emiliano]

The scenario as you described it seems to indicate a change in the plan's sponsor identity, not the plan itself. If that is the case, then I believe the change in plan sponsor can be reported on Form 5500 line 4.

Regarding a terminating plan, an annual report is still required to be filed for the partial year that the plan existed.

Regarding IRS and DOL penalties, the penalties for late filing and failure to file did not change, as far as I am aware, for the 1999 filing year.

[thepensionmaven]

You raise an interesting point.

My questions was whether we should do one 5500 or two. I have been getting conflicting advise.

One says the sponsor is really the same, ie a partnership that incorporates is in essence still the sponsor, just the form of the company has changed, therefore only one 5500 is necessary.

The partnership plan HAS NOT bee terminated; the assets and liabilities of the old plan have been assumed by the successor corp.

I do not believe this would constitute a termination requiring us to file a 5500 for the period the plan was under the auspices of the partnership, would it?

Some sources say no, only file one 5500 for the new entity.

But, i prior years when IRS was involved they wanted to see a filing for the prior entity showing zero assets and the funds transferred to the successor entity.

This still seems like a complete waste of time. Why is there the question about a change in sponsorship and why do they ask for the old EIN if they do not link them up??

Thanks

[Guest Emiliano]

File a Form 1065 for the partnership. File a Form 1120 for the new corporation entity. File a Form 5500 for the employee benefit plan. If it's true that the assets of the old plan ("employee benefit plan"?) have been assumed by the new corporation as you stated, then you may have some serious fiduciary legal problems.

[thepensionmaven]

I didn't make my point very clearly.

The assets and liabilities of the partnership plan were taken over by the like PLAN of the successor corporation not by the corporation.

I don't see any fiduciary problems under that scenario.

Thanks for the help.

Steve

[Guest mo again]

FWIW, I always filed only one 5500 in this kind of situation, despite the IRS's "preferences", and as long as the "trail" was documented in terms of prior EIN's and PN's, never heard another word about it. At least one of those was audited (not for that reason) and the agent closed with no change.