IRS Filing Requirements

If a plan was created in December of 2022 but no assets were in the plan until 2023 are there any filing requirements with the IRS for the year of 2022? 

The assets were deducted from their pay in 2022 but didn't hit the Trust account until 2023. So are the assets considered to be in the Trust when deducted or when they actually hit the Trust account? 

If you file the 5500 on an accrual basis, the 12/31/22 asset value would include the deferrals that were withheld but not yet deposited to the trust by EOY. This also avoids the problem of filing the "first year" 5500 for 2023 showing a 2022 plan effective date and having the IRS ask why no 2022 5500 was filed.

Given the timeline you mentioned, I would recommend also confirming the timeliness of those deposits if you haven't done so already.

Yes. Unless it qualifies as a 1 person plan with less than $250,000 in assets.

Whether you report an EOY balance and/or contributions will depend on whether you use the CASH or ACCRUAL method of accounting.

We are using the CASH method of accounting. Therefore the plan had zero assets held on 12/31/2022. In this case is a 5500 form required even though there were no assets in the plan? 

4 minutes ago, dragondon said:

We are using the CASH method of accounting. Therefore the plan had zero assets held on 12/31/2022. In this case is a 5500 form required even though there were no assets in the plan? 

Yes. 

Financial information is only one part of the return.

Sometimes we need to step back and see if we are solving a real-world problem or just enjoying a stimulating intellectual conversation.

dragondon, since you are asking the question in September 2023 about a 5500 for calendar year 2022 plan, I must ask as there a Form 5558 Application for Extension of Time
To File Certain Employee Plan Returns filed for the plan before August 1st (or is the taxpayer's 2022 income tax return otherwise on an approved extension)?  If yes, then why bother discussing whether to file the 5500.  Just do it.  The filing will be trivial and you will not have to explain later why an extension was requested.

If no, then I can understand it is worth the effort to look for an acceptable reason why the plan is not required to file for 2022.  Facing the prospect of paying a bazillion dollar penalty for a late filing would be particularly unpalatable for a new plan.

I have seen situations where a plan had reasons to argue whether having no assets meant the plan technically did not exist or was not fully formed.  Where this has involved a new plan, an argument (simplified) is along the lines that a plan with no assets does not have a trust, and a trust is required for the plan to exist. 

This is not advice, and I do not advocate taking this position.  If the plan is facing major penalties, I do suggest finding an attorney who has experience working (successfully?) with clients that have been in similar situations.

Yes, a 5500 is required.  Even if a new plan is set up for 2022 in January of 2023 (so no deferrals for 2022; ps only) and the client decides ultimately decides NOT to make a profit sharing contribution for 2022, the DOL has said a 5500 is needed.

Second: a deposit to the plan is NOT required for the plan to be in effect; the trust may not have any funding, but it exists as part of the plan and normal filing rules apply.  We always have and will use accrued accounting for lots of reasons (I think using cash is just one big problem since nothing ever matches), but if you are using cash you won't have any numbers in the financials, and that's fine.

Also, regarding the comments about the extension (5558 form), remember that there is an AUTOMATIC EXTENSION without the 5558 if the employer's tax return is on extension and certain conditions are met. Note, this extension on filling the 5500 does NOT go to 10/15 if the employer's return is due 9/15 (partnerships and S Corps)  Read this:

If certain requirements are satisfied, your company may be able to rely on its federal income tax return extension to automatically extend the Form 5500 filing deadline. (As a reminder, the Form 5500 filing deadline is the last day of the seventh month after the plan year ends—for a calendar-year plan, the deadline is July 31.) An automatic extension for filing Form 5500 is granted to the extended due date of the sponsoring employer’s federal income tax return if three conditions are satisfied: (1) the plan year and the employer’s tax year are the same; (2) the extended due date for the employer’s federal income tax return extension is later than the regular Form 5500 due date; and (3) a copy of the application for the income tax extension is maintained with the filer’s records (it is not included with the Form 5500 filing).

If need be, let's not overlook the opportunity for the plan to use a delinquent filer program.

18 hours ago, Larry Starr said:

Even if a new plan is set up for 2022 in January of 2023 (so no deferrals for 2022; ps only) and the client decides ultimately decides NOT to make a profit sharing contribution for 2022, the DOL has said a 5500 is needed.

Larry, in your example, a 2022 5500 would not be required, it could file its first return on the 2023 from 5500.  I take your point that a 5500 is still required, but the timing requirements would change with the addition of a retroactive adoption.