Check plan reporting categories, combined assets, final-year rules and deadlines. See why a small owner-only plan can still need a return.
July 8, 2024 · Financial Forte Staff
Historical article: prepared retrospectively using information available as of July 8, 2024.
A business owner may finish the income-tax return and assume the retirement plan's paperwork is handled too. Annual plan reporting can follow a separate deadline and a separate set of rules. For a calendar-year plan reviewing its 2023 reporting obligations, July is the time to confirm what must be filed and who will complete it.
Start with the plan's participant structure, reporting category and year-end assets. An owner-only arrangement can have a filing obligation even without common-law employees. A plan covering employees may use a different form and require additional information. The account's marketing name does not establish the filing rule.[1]
Identify the arrangement before choosing the form
Form 5500-EZ applies to qualifying one-participant plans and certain foreign plans that are outside the relevant ERISA annual-reporting requirements. A qualifying one-participant arrangement can include an owner and spouse, or partners and their spouses, subject to the conditions in the instructions. It does not mean any small business with only a few participants.[1]
A plan subject to ERISA reporting generally files Form 5500 or, if eligible, Form 5500-SF. The short form has its own conditions. Do not choose it solely because the plan has fewer participants or because another business used it. Confirm the category with the plan administrator using the applicable year's instructions.[1]
A staffing change can alter the analysis. If the business hired employees, determine how their eligibility and participation affect the plan. An account opened as a solo 401(k) does not necessarily remain an owner-only arrangement indefinitely. Keep the employment census and plan records connected to the reporting decision.
Apply the asset exception to all relevant plans
For a qualifying one-participant plan, the 2023 Form 5500-EZ instructions generally provide an exception when combined year-end assets of the employer's one-participant plans do not exceed $250,000, unless it is the final plan year. The combined amount matters; reviewing each plan in isolation can lead to the wrong conclusion.[1]
Suppose an owner’s business maintains two qualifying one-participant plans. One has $180,000 at the end of 2023 and the other has $90,000. Together they hold $270,000. Both individual balances are below $250,000, but the combined amount exceeds it.
Under the stated assumptions, the asset exception would not excuse either plan's required return. The instructions call for a Form 5500-EZ for each of the employer's one-participant plans when the combined assets exceed the threshold. The owner should not file only for the larger account or assume the smaller plan is invisible.[1]
Now compare a different qualifying owner-only plan that held $140,000 at the start of 2023 and distributed all its assets during its final plan year. The final-year requirement needs separate attention even though the balance is below $250,000. Terminating a plan does not mean the last annual return can be skipped.
These examples assume the plans qualify for the one-participant reporting rules. They do not determine whether two businesses must be treated together, whether an employee was improperly excluded or whether the reported asset values are correct. Those questions need to be resolved before using the exception.
Confirm the deadline and the extension procedure
The general Form 5500-EZ deadline is the last day of the seventh calendar month after the plan year ends, subject to weekend and holiday rules. For a calendar-year 2023 plan, that points to July 31, 2024. A timely Form 5558 can provide an extension of up to two and a half months under the instructions. For the stated calendar-year example, that would generally move the deadline to October 15, 2024.[1]
An income-tax return extension should not simply be assumed to extend the plan return. The instructions provide an automatic extension tied to the employer's tax return only when specified conditions are met. Ask the preparer to identify the basis and resulting deadline, then retain the supporting record.[1]
Check how the return must be submitted. Electronic-filing requirements can apply, and Form 5500-EZ can be filed through EFAST2. A completed paper copy on the owner's desk is not proof that an electronic filing was accepted. Use the applicable instructions to confirm the method and keep evidence of submission.
If an earlier return may have been missed, obtain advice about the appropriate correction or delinquent-filing process. Do not assume a current-year filing cures prior years or that the same relief program applies to every form. The plan's category and facts matter.
Treat reporting as an oversight control
For an ERISA-covered plan, fiduciary and administrative responsibilities extend beyond submitting an annual form. Accurate participant, contribution and asset records support both reporting and plan operation. Owner-only plans may sit outside ERISA Title I, but tax and reporting obligations can still apply.[1][2]
Assign one person to collect the census, reconcile year-end statements and confirm that the preparer has what is needed. Assign another appropriate review step before signing. Outsourcing preparation is useful, but the employer should understand the return it authorizes and follow unresolved discrepancies to completion.
Two practical measures are whether the return or extension was submitted on time and whether the reported assets reconcile with the underlying records. In the two-plan example, the review should account for the full $270,000 rather than testing only the $180,000 statement. These checks take some staff or provider time, but they can reveal errors before a deadline becomes urgent. They do not establish that every plan requirement has been satisfied.
This week, ask for the form category, reporting year, deadline, preparer and submission evidence in one place. That short record can prevent the annual return from falling between the accountant, payroll team and retirement-plan provider while everyone assumes someone else has it covered.
Related reading
Have more questions about retirement plan reporting and employer oversight? Email Dave at dave@financialforte.com to discuss your questions and next steps.
The contact invitation is current; it does not imply this contact path existed on the historical reference date.
Educational information, not personalized investment, tax, legal or benefits advice. Examples use hypothetical assumptions. Verify current rules and your circumstances before acting.
