If the plan assets of a one-participant plan are $250,000 or less at the end of the plan year, does the plan need to file Form 5500-EZ?
No. In fact, the plan does not need to file Form 5500-EZ even if the plan assets exceeded $250,000 in a previous plan year, so long as the assets are less than $250,000 at the end of the current plan year. The employer aggregates all plans it sponsors in determining whether the employer must file. The plan must file in the year of termination, regardless of the asset amounts. Comment: Since the instructions do not provide any procedure for alerting the IRS as to why a one-participant with assets falling below $250,000 is ceasing to file, there is a possibility that the IRS will send a penalty letter. We recommend that the preparer warn the client of the possibility and that it is prepared to explain to the IRS that it is not required to file. If the client is concerned about receiving the penalty letter, the preparer simply can continue filing.
Related Questions
- If a one-participant plan elects to file Form 5500-SF instead of Form 5500-EZ, is the form subject to public disclosure on the DOL website?
- I heard that short plan year filers have a 90-day extension of time to file their Form 5500. Is that true?
- What conditions must a one-participant plan satisfy to file a Form 5500-SF?
