Residual Received After Plan Termination

We have a plan that terminated as of 12/31/24, but we just found out that there was a residual that came in during 2025 and then immediately paid out.  How do people handle this type of situation?  Do we just file the 12/31/24 as the final?  Or do we have to do an additional 5500 showing the money in and out in '25 (which is a small amount)?

Ive seen it done both ways as a receivable and payable on the prior 5500 making that one zeroed out on an accrual basis and a final return, and I've seen a short year final return filed for year the money came in and out. Which ever one you and the client are most comfortable with defending from a potential audit stand point and who is paying the cost of the final year 5500 if you decide there an additional one required should be agreed upon upfront.

It's probably also been completely ignored by some though that's not the correct way to handle it.

On 9/25/2025 at 3:16 PM, Lou S. said:

receivable and payable on the prior 5500 making that one zeroed out on an accrual basis and a final return

I would recommend this but it is the client's call, and certainly very defensible, especially if the residual and payout happened in Q1.

Although I agree with either approach, what if the residual is a considerable amount, say $500 or even $1,000+. No indication of what the small amount.

What do you consider a small amount to be defensible?

If the plan’s administrator has regularly used the accrual method of accounting for the plan’s financial statements and Form 5500 reports, why would a receivable or a payable be limited to a small amount?

This is not advice to anyone.

4 hours ago, Jakyasar said:

What do you consider a small amount to be defensible?

"Small amount" is (usually) relative to the plan size, and whether there might reasonably be "unpaid and/or unbilled" expenses.