$250K threshhold for owner only plan

In calculating whether the plan has $250K, does one count receivables??

FWIW, we don't care. We ALWAYS file a 5500.  If you don't file a 5500 for a plan that is under the $250k amount, you never start the statute of limitations running.  It's a gotcha that most people don't pay attention to; we do.  

We don't. In fact, we file on a cash basis when we do first file to help eliminate any concern.

10 hours ago, Larry Starr said:

FWIW, we don't care. We ALWAYS file a 5500.  If you don't file a 5500 for a plan that is under the $250k amount, you never start the statute of limitations running.  It's a gotcha that most people don't pay attention to; we do.  

Larry, I know what you mean but, for everyone else who may not, can you please elaborate on your statute of limitations comment? :). To what are you referring?

I don't work on any plans so small that filing a 5500 is optional.  However, back when I did I was always in the same school of thought as Larry.   The Form 5500 with modern software just isn't that hard to complete and the simple ones for small plans is low in terms of labor.  In return your client gets the statute of limitations started.    It was an easy recommendation in my mind to make.  

We also file 5500s regardless of assets, and we make that clear to the client from day one.  

I understand the viewpoint - filing it is cheap insurance. However, I do have a question -  when, if ever, have you had the IRS propose to disqualify a plan that you administer, where the SOL prevented taxation prior to the 3 year SOL period?

41 minutes ago, Belgarath said:

I understand the viewpoint - filing it is cheap insurance. However, I do have a question -  when, if ever, have you had the IRS propose to disqualify a plan that you administer, where the SOL prevented taxation prior to the 3 year SOL period?

Never.  But I have seen plenty of cases where someone thinks they are exempt so they don't file, only to find out they did not qualify for the exemption and now have to pay to file as a late filer.  If you have a TPA for calculations or whatever, it doesn't make sense to me to not file a Form 5500.  I could understand someone not wanting to engage a provider just for the 5500, but if they are already servicing the plan in some capacity...

What's the penalty for filing an EZ if you should have filed a "regular" 5500?

Technically the "regular" 5500 is late so its DFVCP, but you would at least have an argument that you filed an EZ beleiving it was a correct form.  You would not have that argument if you relied on the $250k filing exemption.

For the EZ i think its $500 per late filing, and I had people "forget" that its combined value of plans, not each plan.  I have also seen where some thought the assets were less than they were, etc.  No such issues if you take 5 minutes to fill out the form and mail it to the IRS, at least then you can amend if you make a mistake on the numbers.

16 hours ago, Mike Preston said:

We don't. In fact, we file on a cash basis when we do first file to help eliminate any concern.

Mike, what if first year of (new DB) plan has an accrued contribution >$250,000, or say $200,000 but there is existing DCP with $200,000 - do you not file because the DBP has zero assets in its first year on a cash basis and then begin filing in year 2?

I will if the client, aware of the sol issue decides not to file. 

8 hours ago, Gadgetfreak said:

Larry, I know what you mean but, for everyone else who may not, can you please elaborate on your statute of limitations comment? :). To what are you referring?

Referring to the statute of limitations with regard to IRS being able to attack the plan; if you don't file, they are not limited in the time they have to go back and find problems.  Does that help?

14 hours ago, Larry Starr said:

Referring to the statute of limitations with regard to IRS being able to attack the plan; if you don't file, they are not limited in the time they have to go back and find problems.  Does that help?

Ahhh. Got it. Thanks.

20 hours ago, RatherBeGolfing said:

But I have seen plenty of cases where someone thinks they are exempt so they don't file, only to find out they did not qualify for the exemption and now have to pay to file as a late filer.

Ain't that the truth!! Just saw one of those yesterday, in fact.