New procedure when plan sponsor changes EIN... must file 5500 showing zero participants?

This has happened a few times in the past couple of years, so I was wondering if anyone else had the same experience...

Plan sponsors change their EINs for reasons.  When we complete the 5500-SF, we note on Line 4 that in the previous year, they used to be a different name and different EIN; presumably that is there to help EBSA track the filing when the EINs don't line up.  A year or so later, the plan sponsor gets a letter that a filing is missing.  When we finally speak to someone, they tell us that the old EIN needs to have a final 5500-SF filed showing the participant count going down to zero and the assets transferring to the plan under the new EIN.

"But it's the same plan."  Doesn't matter.  In their tracking, that EIN is still open and needs a filing until the participant count (and the asset values, but that's secondary, it seems) goes down to zero and a final filing is received.  We have been instructed to correct this issue by actual IRS agents by sending in amended filings showing this, even after they acknowledge that we have entered the information on Line 4 of the new EIN's filing that references the old EIN.

So we have started proactively filing final 5500s for plans where the EIN changes (and "first filings" under the new EINs) when we see this happening.  We've gotten no correspondence back on any yet, but there are so many questions... What about timing requirements?  What is an appropriate date to use as the transfer, and when does that mean the 5500 is due?  Whose crazy idea is this, and are they serious?  And so on.

Anyone else running into this?  When it happened once, I was willing to just go with what the agent told me to close the issue.  But when it got to several times, and now that our filings that continue the pattern seem to be going through OK, I'm wondering if this is some new directive that I missed.

Thanks.

I guess then the instructions should be changed and the caution should be modified to say "but if you fill in the line 4 with an EIN change we are going to contact you anyway so you can't win."

we have changed the number in the past and never been contacted, but the woodpecker here his banging his head against different objects so knock on wood, I guess.

Also note that with the 2017 Form 5500, Line 4 was changed to include any change in plan name.

*************(from 2017 Form 5500-SF instructions)

Line 4. If the plan sponsor’s name and/or EIN have
changed or the plan name has changed since the last
return/report was filed for this plan, enter the plan
sponsor’s name, EIN, the plan name, and the plan number
as it appeared on the last return/report filed.

The failure to indicate on line 4 that a plan
sponsor was previously identified by a different
name or a different employer identification
number (EIN) or that the plan name has been changed
could result in correspondence from the DOL and/or the
IRS.

*************

19 hours ago, AlbanyConsultant said:

When we finally speak to someone, they tell us that the old EIN needs to have a final 5500-SF filed showing the participant count going down to zero and the assets transferring to the plan under the new EIN.

That's just wrong.  Sounds like they have figured out a workaround to fix whatever the real problem is.  I can't swear to it but I think we have changed EINs without incident, or maybe just responded and it went away, but have definitely never been told to file a final 5500.  I don't think I would even bother to call since I wouldn't trust an answer from the people answering the phones.

1 hour ago, Bird said:

I don't think I would even bother to call since I wouldn't trust an answer from the people answering the phones.

This 100%.  I had to argue with a DOL "investigator" in response to a participant complaint last year.  She was troubled by the fact that the participant was not afforded an opportunity to direct her 401(k) contributions... In a trustee directed plan.  Yea that was an interesting conversation

10 hours ago, Bird said:

I don't think I would even bother to call since I wouldn't trust an answer from the people answering the phones.

It has been my experience that the folks on the toll free 5500 number are quite competent.  Seriously, it rarely takes long for them to go behind the scenes and fix whatever needs fixing.

On 7/20/2018 at 7:35 PM, Mike Preston said:

It has been my experience that the folks on the toll free 5500 number are quite competent.  Seriously, it rarely takes long for them to go behind the scenes and fix whatever needs fixing.

My experiences, too, Mike.  However, there are always some under-trained agents or those who way over think things.

On 7/20/2018 at 8:52 AM, Bird said:

I don't think I would even bother to call since I wouldn't trust an answer from the people answering the phones.

I don't call the IRS any more than I have to, believe me, but when there's a letter saying there there is a missed filing and threatening penalties, that leads to very nervous clients, so I have to do something.

I don't agree with their logic, but doing what they told me to did resolve the issue each time, so there has to be some kind of method to the madness.  Maybe I'm the guinea pig for a new pilot program?

Has anyone heard anything more on this subject?  We forgot to enter the information in Line 4, so were not surprised when a late filing.  We completed the section on the notice that mirrored Line 4 of form 5500-SF figuring that it was resolved and faxed it on 12/7/2018.  On 3/18/2019, client received a final notice (after the shutdown was over).  So, called the IRS and got the answer that AlbanyConsultant did that started this topic.  We were told go back and amdne the 2016 Form 5500-SF as a final (changing participants and eoy balances to 0) and indicate that the assets transferred to the new 'plan' EIN.  And explain on the late notice what happened.  But she didn't indicate that a new Form 5500 needed to be filed for 2016 under the correct EIN - and if we did, it would be late. 

So, what is section 4 for?   (pretty much a rhetorical question at this point)    Has anyone else found a way to make this work.  It doesn't make a lot of sense to do what AlbanyConsultant referred to as that means filing 2 Form 5500s proactively.  Not easy to do in the software. 

Any insight would be helpful.