5500 for new profit sharing plan with no money?

[R. Butler]

We have a profit sharing plan adopted in 1999. No contributions were made during 1999. It is my understanding that a 5500 still must be filed. However, it has been expressed to me that since there is no money, a trust has not been established and the 5500 filing is not required. Which view is correct?

[Cathy from Chicago]

If I recall correctly, we had a similiar situation one year and did not file a 5500. The second year of the plan, we said it was the first year, although put the actual adotion date, which, of course, was the prior year. To date, we've never received notification from the IRS that this approach was incorrect. Course...who knows how the DOL will react?

[thepensionmaven]

It has been our experience that even if the plan is not funded for a certain year, a trust instrument (ie plan and trust) was indeed established.

Therefore, a form 5500 is still due. Obviously the Schedule I would show zero both beginning and end of year.

If I am not mistaken, prior to 1990 you did not have to file a 5500 on a profit sharing plan if no contribution was made.

Anyway, the 5500 should show a contribution if one was accrued. I would check with the client's accountant to see if a contribution for '99 was accrued. The client still has until 9-15-00 to contribute if an extension was filed.

[Guest PC]

Based on a conversation I had with an IRS agent, if there are no assets then there is no trust so the 5500 does not have to be filed. However, if there are any employees eligible to participate in the plan, then the DOL says you have a plan and must file.