No Profit Sharing - do I file a 5500

New p/s plan adopted in November 2018 and the 401k was going to start 1/1/2019. They decided not to make a profit share contribution for 2018.  So no assets for 2018 at all. 

Do I still file a 5500 with 0.00 for 2018 ?

I think so...

I know those that file on the accrual and those that file on the cash method for 5500s and both have their positives and negatives in my opinion.  In this case, if file in cash, then no filing until funded which will be 2019 to avoid a possible elective deferral failure on the 401k.  However, I like to file in this instance in 2018 reflecting the 11/18 effective date (assuming adoption is effective date).for PS and include 0 in assets..  I recommended holding until the actual corporate return is filed just in case they change their mind last minute and make a contribution for 2018 and want to reflect that decision on the SAR for 2018.  I’ve seen this happen as well in the past. 

19 hours ago, PainPA said:

New p/s plan adopted in November 2018 and the 401k was going to start 1/1/2019. They decided not to make a profit share contribution for 2018.  So no assets for 2018 at all. 

Do I still file a 5500 with 0.00 for 2018 ?

Yes.  You still have to file a Form 5500.  The 5500 reports more than just assets.  If you skip 2018 and then file your first 5500 for 2019 with an initial effective date of 11/2018, you will get an IRS love letter asking for 2018.

Disagree, with no assets (including accruals) for 2018 the Trust didn't legally exist in 2018 and without a Trust there was no valid Plan so I would skip 2018 and reflect 1/1/2019 as the true effective date on the 2019 initial 5500 filing.

On 6/29/2019 at 1:35 PM, Flyboyjohn said:

Disagree, with no assets (including accruals) for 2018 the Trust didn't legally exist in 2018 and without a Trust there was no valid Plan so I would skip 2018 and reflect 1/1/2019 as the true effective date on the 2019 initial 5500 filing.

My understanding is (though I cant cite anything, Rev. Rul. 81-114 doesn't really fit our facts) that the IRS will consider it a valid plan even without a corpus for the first year. If a document has been signed with a 2018 effective date and a plan has been communicated to the employees, I would file a $0 5500.  

Were there less than that # of participants as of the 2018 ED that would trigger an audit requirement?  If so I would file the 5500-SF without giving it a second thought.  I am not sure the DOL would agree with the "no corpus" theory. 

Heaven's sake, the only advice should be FILE. An ounce of prevention is worth a pound of cure. 

I agree on the “ounce of prevention” as a no brainer until I thought filing $0 would cause some flags.

then again it is better to not file and then have an effective date of 11/01/2018 and no 5500. 

I can flip flop all day

thank you everyone for the posts, all of which raised the same concerns I was going thru in taking the path of least resistance.

Happy 4th

13 minutes ago, PainPA said:

$0 would cause some flags.

Flags for what?  No discretionary contribution?  You wont have a plan characteristic code for 401(k) because it wont start until 1/1/19, so all the IRS/DOL will see is a PSP initially effective 11/1/18 with no contribution for 2018.  It wont be a problem.  They will not come after you and say that your plan is disqualified because there was no trust corpus.

16 minutes ago, PainPA said:

then again it is better to not file and then have an effective date of 11/01/2018 and no 5500. 

Huh?  An 11/1/18 effective date and no 5500 for 2018 will be a red flag for sure.  I guarantee you that you will get a love letter from the IRS if your effective date is 11/1/18 and the first 5500 you file is for 12/31/19.  The system will catch that every time, and you will have spend time (and maybe money) explaining why you didn't file for 2018 and why you think you didn't have to file.    

Path of least resistance is filing a 2018 5500 with a $0 balance $0 contribution.

Also, although no assets, won't there be active participants at the end of the year (12/31/2018)?  Or do they all enter on 01/01/2019...

Unless they are not counting pre-plan service for 5500 purposes there will be participants both as of the ED and the end of the year.

There would have to be active participants at EOY, otherwise they couldn't have entertained a PS for '18.

Remember, 'Active' doesn't been 'Actively contributing'

Seems to me RR 81-114 could apply in some situations.  If it was simply a PS plan and no 2018 PS contribution was to be made, I would certainly take the position that there is no plan for 2018 as there is no corpus, hence no 5500.

But if deferrals started 1/1/19, then contributions would be made prior to the due date of the 2018 tax return.  Does this satisfy the corpus rule for 2018 even though the deferrals are 2019 contributions?  Can argue either way I suppose, and 81-114 doesn't really address this.

So, it's probably less time, risk and brain damage to just do a 2018 5500 than it is to think too hard about the emanations and penumbras of 81-114.

If there were over 100 eligibles on the first day of the 2018 plan year I'd love to see the CPA audit report for the zero activity 5500.