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Form 5500-EZ - Owner and Children


Vlad401k

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I have a question about if this plan can file using Form 5500-EZ.

 

There are 2 people in the company: 100% owner and his child. The child does not yet qualify for the 401(k) plan because he has not met the eligibility requirements (the plan requires participants to be age 21 and the child is not yet 21).

 

Since the 100% owner is the only participant in the plan, can a Form 5500-EZ  be filed instead of Form 5500-SF?

 

Below is the text from the 2022 Form 5500-EZ Instructions:

 

"1. Covers only you (or you and your spouse) and you (or
you and your spouse) own the entire business (which may be
incorporated or unincorporated); or


2. Covers only one or more partners (or partners and their
spouses) in a business partnership (treating 2% shareholder of
an S corporation, as defined in IRC §1372(b), as a partner); and


3. Does not provide benefits for anyone except you (or you
and your spouse) or one or more partners (or partners and their
spouses)."

 

Thank you!

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  • 2 months later...

I have a similar situation, and understand that EZ is the correct current filing.  The child will eventually become plan-eligible (about two years from now).

The form of entity is an LLC, that has elected to be taxed as an s-corp (a common situation), and sponsors a 401k plan ("Plan X").  Is the child attributed by IRC 318 and therefore is considered a "partner" for purposes of 5500 EZ vs 5500 SF? 

Assume that Plan X is sponsored by a sole member LLC, with no employees, other than the owner who receives a W-2 due to form of taxation, and the child (also receiving a W-2).  

My understanding is that attribution doesn't apply for 5500 determination (EZ vs SF) purposes, to LLC's, taxed as either a disregarded entity Schedule C (sole member LLC) or taxed as a partnership.  For example, an LLC not electing s-corp tax treatment, with Mom 100% owning the LLC, and son being a W-2 employee and plan-eligible, requires a Form 5500 SF.  Does this change when the form of taxation is s-corp?

Does Plan X, which formerly would have filed an EZ, still file an EZ after the child becomes plan-eligible, or have to file an SF after the child becomes plan-eligible?

Meaning, does the legal form of entity (LLC) take precedence, or does the method of taxation (s-corp) take precedence, in the determination of whether EZ is required vs SF?

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