The cost of preparing the annual return (Form 5500-EZ
or Form 5500-SF required after plan assets exceed $250,000) is nominal in comparison to the additional funding a one-person 401(k) plan allows.
The Form 5500 and its sister, the Form 5500-EZ
, are benefit plan sponsors what the Form 1040 and its sisters are to individual taxpayers.
Additional project work will be supplemented by the Learn, Educate, Self-correct, Enforce (LESE) program; the Individual Retirement Arrangements program, which oversees payroll-deduction individual retirement accounts (IRAs), SEPs (simplified employee pension plans), SARSEPs (salary reduction simplified employee pension plans) and SIMPLEs (savings incentive match plans for employees); and the Form 5500-EZ
Delinquent Filer Penalty Relief program for one-participant plans.
Small businesses that fail to file required annual retirement plan returns, usually Form 5500-EZ
, can face stiff penalties: up to $15,000 per return.
Under the recently revised 5500 format the prior Form 5500-C/R filed by small plans (those with fewer than 100 participants) was eliminated, and the Form 5500-EZ
Effective for plan years beginning in 2007, the threshold for filing IRS Form 5500-EZ
(one-participant plans) is increased from $100,000 to $250,000.
Department of Labor's Employee Benefits Security Administration, the Internal Revenue Service and the Pension Benefit Guaranty Corporation announced an extension of the deadline for filing Form 5500 and Form 5500-EZ
annual returns/reports due to property damage, destruction and power outages that resulted from Hurricane Isabel.
Outside the EPCRS process, the IRS maintains a non-VCP submission program for 457(b) plans, an Employee Plans Voluntary Closing Agreement request process for employee plan issues not covered under EPCRS, and a penalty relief program for late filers of Form 5500-EZ
, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan.
For Form 5500-EZ
filers, the elimination of Schedule P is effective for the 2005 and later plan years.
The extension applies to plan administrators, employers and other entities who file the Form 5500 and Form 5500-EZ
that are located in the areas designated as federal disaster areas because of last month's terrorist attacks.
The requirements exclude filers of Form 5500-EZ
, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan, and Form 5500, Annual Return/Report of Employee Benefit Plan, for plans without employees.
The IRS has also released information copies of the Form 5500-EZ
return to be used by certain one-participant retirement plans for plan year 2000 filings and related instructions.