5500EZ

had a call from an accountant asking is a client that is a Sub S considered to fall under the  Owner only rule

(2 owners in sub s) for filing of the 5500EZ as long as assets are under 250 limit

I have always thought the instructions used the word partnership and thus an EZ option was not available for Sub S corp structure - ? 

A one-participant plan means a retirement plan (that is, a defined benefit pension plan or a defined contribution profit-sharing or money purchase pension plan), other than an Employee Stock Ownership Plan (ESOP), which: 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; 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).

35 minutes ago, Doghouse said:

A one-participant plan means a retirement plan (that is, a defined benefit pension plan or a defined contribution profit-sharing or money purchase pension plan), other than an Employee Stock Ownership Plan (ESOP), which: 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; 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 - my question is the term "partners" - this plan has two owners, no employees, but it is not a Partnership for business entity type - it is set up as an S Corp for taxing purposes - not an LLP so does the term partner mean taxing entity of business or just only  owners? 

If not a husband and wife, the entity is a corporation and does not meet the definition of a partnership. Sorry, I was originally reading it as a husband and wife situation.

Why file an EZ if under 250,000?

You could always file a 5500-SF using the owner-only questions, which are pretty much the same as the EZ questions.  They you don't have to worry about corp or partnership or whatever.  PLUS, you get the added benefit of knowing the govn't received it.  (with a potential downside that the form now is open tot he public)

Aren't the requirements for filing an owner-only 5500-SF exactly the same as for filing an EZ?

1 hour ago, BG5150 said:

Why file an EZ if under 250,000?

You could always file a 5500-SF using the owner-only questions, which are pretty much the same as the EZ questions.  They you don't have to worry about corp or partnership or whatever.  PLUS, you get the added benefit of knowing the govn't received it.  (with a potential downside that the form now is open tot he public)

If the 5500-SF is filed as a single participant plan (to mimic a 5500-EZ) the 5500-SF is not on the EFAST public website and it not open to the public.... just like the 5500-EZ.

Thanks, chc.  I forgot about that.

But this is not an owner-only plan - you need to file a regular public 5500-SF.  Not sure if that has been said clearly above, but maybe I missed something.

The owner-spouse & partnership partner-spouse with no other employees is a specific requirement to be non-ERISA one-participant plan for 5500/EZ exception. 

ASPPA ERISA Outline Book has it a bit more detailed than DOL section 2510.3-3.  Any shareholder of any corporation (S corp & C corp treated the same) that are not owner and spouse would not qualify as a one-participant plan for exception to 5500-SF filing.

Any business arrangement that includes non-spouse owners would seem to be subject to 5500 filing requirements regardless of asset value.

More than 2% shareholders are treated like partners for the 5500-EZ

From PPA:

SEC. 1103. REPORTING SIMPLIFICATION.

(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR OWNERS AND THEIR SPOUSES.—

(1) IN GENERAL.—The Secretary of the Treasury shall modify the requirements for filing annual returns with respect to one-participant retirement plans to ensure that such plans with assets of $250,000 or less as of the close of the plan year need not file a return for that year.

(2) ONE-PARTICIPANT RETIREMENT PLAN DEFINED.—For purposes of this subsection, the term ‘‘one-participant retirement plan’’ means a retirement plan with respect to which the following requirements are met: 

(A) on the first day of the plan year— (i) the plan covered only one individual (or the individual and the individual’s spouse) and the individual owned 100 percent of the plan sponsor (whether or not incorporated), or (ii) the plan covered only one or more partners (or partners and their spouses) in the plan sponsor; (B) the plan meets the minimum coverage requirements of section 410(b) of the Internal Revenue Code of 1986 without being combined with any other plan of the business that covers the employees of the business; (C) the plan does not provide benefits to anyone except the individual (and the individual’s spouse) or the partners (and their spouses); (D) the plan does not cover a business that is a member of an affiliated service group, a controlled group of corporations, or a group of businesses under common control; and (E) the plan does not cover a business that uses the services of leased employees (within the meaning of section 414(n) of such Code). 

For purposes of this paragraph, the term ‘‘partner’’ includes a 2-percent shareholder (as defined in section 1372(b) of such Code) of an S corporation. S

18 hours ago, PAiPal said:

For purposes of this paragraph, the term ‘‘partner’’ includes a 2-percent shareholder (as defined in section 1372(b) of such Code) of an S corporation.

Well, I must say I learned something today.  Thanks so much! 

Me too!

thanks so much for all the help.... looks like with the above info this Sub S with two owners 50/50 now are able to use the 5500EZ  and not file if $250,000 or less in assets - 

Is it such a chore to file it?

A Sub S corp with two owners must still be owner-spouse to be considered a "one-participant plan".  A partnership must be the legal entity to consider co-owners as partners.  I had a recent question about brother & sister owners of a Sub S, and they did not meet the owner-spouse requirement for a "one-participant plan".

19 hours ago, CJ Allen said:

A Sub S corp with two owners must still be owner-spouse to be considered a "one-participant plan".  A partnership must be the legal entity to consider co-owners as partners.  I had a recent question about brother & sister owners of a Sub S, and they did not meet the owner-spouse requirement for a "one-participant plan".

On what are you basing this?  Until I saw the post from PAiPal with the language from PPA, I would have agreed with you, based on the current IRS filing instructions, but it appears those instructions have not been properly updated.

But is that rule about 2% shareholders of S corporations effective yet if the Secretary hasn't acted on it yet?

Maybe I'm being too conservative, but I did take notice in how the definition changed from the 2007 5500 instructions to current instructions.  The distinction to me is that under PPA, the IRS rule was changed; however, the ERISA standards of DOL were not. 

Based on 29 CFR 2503.3-3 clarification published in 2010, the sole owner & spouse (whether incorporated or not) and partners in a partnership were not covered by ERISA.  I didn't see anything indicating "partner" included S-corp in addition to partnerships.  Also, the current 5500 instructions include the terminology "The Form 5500-EZ generally is used by one-participant plans and certain foreign plans that are not subject to the requirements of section 104(a) of ERISA to satisfy certain annual reporting and filing obligations imposed by the Code."

2007 Form 5500 instructions never mentioned ERISA applicability, so I'd conservatively file the Form 5500 for S corp owners to satisfy the ERISA requirements.