IRS Form 5500-EZ Explained: Rules + 401k Filing Example [FAQ]

Form 5500-EZ is a tax form used by certain small employee benefit plans to file an annual report with the Internal Revenue Service (IRS) and the Department of Labor (DOL). The form must be filed by certain small pension plans, profit-sharing plans, and employee stock ownership plans (ESOPs).

The form includes information about the plan, including the name and employer identification number (EIN) of the plan sponsor, the plan’s EIN, the plan’s type, the plan’s funding method, and the plan’s assets and liabilities. It also includes information about the plan’s participants and beneficiaries, such as the number of participants and the number of active and inactive participants.

Form 5500-EZ is a shorter version of Form 5500, which is used by larger employee benefit plans. Form 5500-EZ is generally easier to complete than Form 5500 and is designed for use by smaller plans that meet certain requirements.

Does a 401(k) plan have to file form 5500-EZ

401(k) plans are defined contribution retirement plans that are sponsored by an employer. Whether a 401(k) plan is required to file Form 5500-EZ depends on the size of the plan and the number of participants it has.

Generally, a 401(k) plan with fewer than 100 participants at the beginning of the plan year is eligible to file Form 5500-EZ. However, there are some exceptions to this rule. For example, a 401(k) plan that is a multiemployer plan (a plan maintained by two or more unrelated employers) or a plan that has received a hardship or terminations waiver from the DOL is not eligible to file Form 5500-EZ.

If a 401(k) plan is required to file Form 5500-EZ, it must be filed by the last day of the seventh month following the end of the plan year (for example, July 31 for a calendar year plan). The plan administrator is responsible for completing and filing the form.

What is the due date for form 5500-EZ?

The due date for Form 5500-EZ is the last day of the seventh month following the end of the plan year. For example, if a plan has a calendar year plan year (January 1 to December 31), the due date for Form 5500-EZ would be July 31 of the following year.

It’s important to note that Form 5500-EZ must be filed every year, even if the plan did not have any activity during the year. If the due date falls on a weekend or a holiday, the form is due on the next business day.

If a plan is required to file Form 5500-EZ and the form is not filed by the due date, the plan may be subject to penalties. The DOL and the IRS can assess penalties for failure to file a timely and complete Form 5500-EZ. The amount of the penalty depends on the circumstances and can range from $25 per day to up to $15,000 per year.

If a plan has missed the due date for Form 5500-EZ, it is important to file the form as soon as possible to avoid further penalties. The plan administrator can request a filing extension if needed.

What are the penalties for late filing of form 5500-ez?

The penalties for late filing of Form 5500-EZ can vary depending on the circumstances and can range from $25 per day to up to $15,000 per year. The specific penalty that is applied may depend on the reason for the late filing, the size of the plan, and the length of the delay.

The Department of Labor (DOL) and the Internal Revenue Service (IRS) are responsible for enforcing the requirement to file Form 5500-EZ and can assess penalties for failure to file a timely and complete form. If a plan is required to file Form 5500-EZ and the form is not filed by the due date, the DOL and the IRS may assess a penalty.

In general, the longer the delay in filing, the higher the penalty. The DOL and the IRS may also assess a penalty if the form is not complete or if the information on the form is incorrect.

It’s important to note that Form 5500-EZ must be filed every year, even if the plan did not have any activity during the year. If a plan has missed the due date for Form 5500-EZ, it is important to file the form as soon as possible to avoid further penalties. The plan administrator can request a filing extension if needed.

What is reasonable cause for late filing form 5500-EZ?

Reasonable cause is a defense to the penalties for late filing of Form 5500-EZ. If a plan can show that it had reasonable cause for not being able to file the form on time, it may be able to avoid or reduce the penalties that would otherwise be assessed.

Reasonable cause is determined on a case-by-case basis and can depend on the specific circumstances of the late filing. Some examples of situations that may qualify as reasonable cause for late filing Form 5500-EZ include:

  • Natural disasters, such as floods or earthquakes
  • Serious illness or injury of the plan administrator or another key person responsible for filing the form
  • Death of the plan administrator or another key person responsible for filing the form
  • Errors or delays by a third party, such as a service provider or financial institution, that were beyond the control of the plan administrator

To claim reasonable cause for late filing Form 5500-EZ, the plan administrator must provide a written statement explaining the circumstances that caused the late filing and why those circumstances constituted reasonable cause. The statement should be included with the Form 5500-EZ when it is filed.

Can you file an extension for form 5500-ez?

Yes, it is possible to file an extension for Form 5500-EZ. An extension of time to file Form 5500-EZ can be granted if the plan administrator can show good cause for the extension.

To request an extension of time to file Form 5500-EZ, the plan administrator must file Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. Form 5558 must be filed by the due date of Form 5500-EZ.

Form 5558 allows the plan administrator to request an extension of up to two and a half months (seven and a half months for certain governmental plans). The extension request must be accompanied by a statement explaining the reasons for the extension and the expected date on which the Form 5500-EZ will be filed.

It’s important to note that an extension of time to file Form 5500-EZ does not extend the time for paying any taxes or fees that may be due. If taxes or fees are due, they must be paid by the original due date to avoid penalties and interest.

How do I file form 5500-EZ?

Form 5500-EZ is filed electronically using the DOL’s EFAST2 system. The EFAST2 system is a secure online system that allows plan administrators to electronically file Form 5500-EZ and other required forms and documents.

To file Form 5500-EZ using the EFAST2 system, the plan administrator will need to create an account and register the plan. This can be done by visiting the EFAST2 website and following the prompts to create an account and register the plan.

Once the account and plan are registered, the plan administrator can begin the process of completing and filing Form 5500-EZ. The EFAST2 system will guide the plan administrator through the process of completing the form and will provide instructions and information on what is required.

It’s important to note that Form 5500-EZ must be filed every year, even if the plan did not have any activity during the year. If a plan is required to file Form 5500-EZ and the form is not filed by the due date, the plan may be subject to penalties. The plan administrator can request an extension of time to file if needed.

Does a SEP or SIMPLE IRA file form 5500?

A SEP (Simplified Employee Pension) plan and a SIMPLE (Savings Incentive Match Plan for Employees) IRA are types of retirement plans that are sponsored by an employer. Whether a SEP plan or a SIMPLE IRA is required to file Form 5500 depends on the size of the plan and the number of participants it has.

In general, a SEP plan or a SIMPLE IRA with fewer than 100 participants at the beginning of the plan year is eligible to file Form 5500-EZ, which is a shorter version of Form 5500 that is designed for use by smaller plans. However, there are some exceptions to this rule. For example, a SEP plan or a SIMPLE IRA that is a multiemployer plan (a plan maintained by two or more unrelated employers) or a plan that has received a hardship or terminations waiver from the Department of Labor (DOL) is not eligible to file Form 5500-EZ.

If a SEP plan or a SIMPLE IRA is required to file Form 5500-EZ, it must be filed by the last day of the seventh month following the end of the plan year (for example, July 31 for a calendar year plan). The plan administrator is responsible for completing and filing the form.

If a SEP plan or a SIMPLE IRA is not eligible to file Form 5500-EZ, it may be required to file Form 5500 instead. Form 5500 is a longer and more complex form that is used by larger employee benefit plans. The requirements for filing Form 5500 are different from those for Form 5500-EZ, so it’s important to determine which form is required for a specific plan.

What if I have a cash balance plan and 401k plan. Do I have to file form 5500-ez for both?

A cash balance plan is a type of defined benefit pension plan, while a 401(k) plan is a defined contribution retirement plan. Both types of plans are subject to different rules and requirements when it comes to filing Form 5500-EZ.

If you have a cash balance plan, whether the plan is required to file Form 5500-EZ depends on the size of the plan and the number of participants it has. In general, a cash balance plan with fewer than 100 participants at the beginning of the plan year is eligible to file Form 5500-EZ. However, there are some exceptions to this rule. For example, a cash balance plan that is a multiemployer plan (a plan maintained by two or more unrelated employers) or a plan that has received a hardship or terminations waiver from the Department of Labor (DOL) is not eligible to file Form 5500-EZ.

If a cash balance plan is required to file Form 5500-EZ, it must be filed by the last day of the seventh month following the end of the plan year (for example, July 31 for a calendar year plan). The plan administrator is responsible for completing and filing the form.

If you have a 401(k) plan, whether the plan is required to file Form 5500-EZ also depends on the size of the plan and the number of participants it has. In general, a 401(k) plan with fewer than 100 participants at the beginning of the plan year is eligible to file Form 5500-EZ. However, there are some exceptions to this rule. For example, a 401(k) plan that is a multiemployer plan or a plan that has received a hardship or terminations waiver from the DOL is not eligible to file Form 5500-EZ.

If a 401(k) plan is required to file Form 5500-EZ, it must be filed by the last day of the seventh month following the end of the plan year (for example, July 31 for a calendar year plan). The plan administrator is responsible for completing and filing the form.

If you have both a cash balance plan and a 401(k) plan, each plan must be evaluated separately to determine whether it is required to file Form 5500-EZ. If either plan is required to file Form 5500-EZ, it must be filed by the due date. If both plans are required to file Form 5500-EZ, separate forms must be filed for each plan.

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