QKA 2 Unit 7 Form 5500 Flashcards by Geoff White

One participant plans may choose to file what type of form 5500?

5500 EZ

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Small plans may file what?

form 5500 or a Form 5500-SF

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All large plans are required to file what?

Form 5500

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The form 5500 EZ is for whom?

Owners of a company and their spouses

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A form 5500 EZ is not required to be filed if the owner only Plan has less than what amount of assets?

$250k

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If a small business has more than 100 employees as of the first day of the plan year, it may file as a small plan file, true or false

The 80-120 rule aside, false, it would file a regular form 5500

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A small plan holds employer securities is it able to file the 5500 SF?

It is not

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According to the 80-120 transition rule, a plan that starts out as a small plan filer with under 100 employees may continue to file as a small plant filer if it’s participant count does not go above what number?

120

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A newly established plan with a Participant count of 100 must file is what?

A large plan

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According to the 80–120 rule a plan that has filed historically as a large filer may file as a small filer if their employee count goes below what number? And must file as a small filer if their purchase bank count goes below this number.

100
80

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To use the form 5500 SF, a company must have fewer than 100 participants on the first day of the plan year. What are three other criteria?

1)No employer securities in the plan
2)All assets have a determinable market value
3)The plan is a not part of a MEP

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Which plans must file schedule A? What does it list?

Only plans that contain insurance policies

Name of the insurance carrier, contract info, premiums, and commissions paid on the contract

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How does a Plan Administrator get the information needed to file a schedule A?

The insurance company is required to provide this information to the plan

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Are 5500 EZ and SF filers required to file schedule A? If not, why?

No, they are required to keep this information on file, only Large Plan, 5500 filets are required to file

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What is schedule C? Who is required to file it and why is it filed?

1) schedule C discloses amount paid from the plan to service providers.

2) Large plans where service providers receive $5000 + in compensation from a plan

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What is schedule D and which companies must file?

Schedule D contains information on Direct Filing entities

Large plans that have investments in Direct Filing entities

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What are Direct Filing entities?

Investment structured, similarly to mutual funds but not subject to public disclosure rules

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What is schedule G and which plans must file it?

Schedule G is used to report loans and leases that are in default and prohibited transactions.

Large Plans

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What is schedule H and which plans must file it?

Schedule, H, communicates
balance sheet
income statement
accountant opinion
compliance questions

All Large Plans must file a schedule H

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What is schedule I and which plans must file it?

Schedule shows financial information about the plan. It is much less expensive than schedule H.

This schedule is only required to be filed by small plan filers

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What is schedule R and which plans must file it?

The schedule provides information on
1) entities providing distributions
2) ESOP
3) funding of plans with required contributions

rEEF

This is used for large and small plans at 5500. There are caveats.

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What are the caveat for a schedule R filing requirement?

It is required when:
1) recordkeeper distributions w/recordkeepers EIN
2) ESOPs & MPPs
3) distributions of non-marketable property

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The DOL is required to publicly display certain information for the form 5500 on his website in how many days after filing?

90 days

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The Filing is performed using the EFAST 2 system. What does EFAST stand for?

ERISA Filing acceptance

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What is the filing deadline?

The last day of the seventh month, following the close of the plan year

Even though the filing deadline for the 5500 and the 8955 SSA are exactly the same do they need to be filed at the same time?

They do not need to be filed at the same time the 5500 is filed with the department of labor and the 8955 SSA is filed with the IRS

What form is filed to request an extension? How long is the extension?

Form 5558 Extension is for 2 1/2 months

What is the automatic step extension as it relates to tax returns?

If the employer’s Tax Year matches the plan year, AND the tax return is on extension, that extension automatically applies to the 5500 filing for that plan year

What does the SAR summarize to Participant?

Information on the plans form 5500 Informs Participant how to receive a copy of the 5500

When is the SAR required to be furnished in Plan Participants?

No later than nine months after the close of the plan year

If the form 5500 was extended, when is the SAR due?

An additional 2 1/2 months is provided

What does the 8955 SSA communicate?

The 8955 SSA records separated employees and their vested balances left behind in the 401(k). It also records, Distributions that occurred after termination.

The DOL provide sample SARS to be used by a unqualified plans, true or false

False the DOL provides sample SARs for qualified plans

The Participant, who has not received a distribution must be included on the form 8955 SSA that is filed for which plan year?

The plan year following the year in which she separates from service

All Large Plans required to have an annual audit which must be performed by who?

An independent qualified public accountant.

What items does an independent auditor evaluate in the report?

Benefit Payment Process Asset Valuation Deposit Timeliness Participant account accuracy operational issues? prohibited transactions? BADPOP

There are two types of audits. What are they and what are their scopes

Unqualified: the auditor reviews, all of the plans, financial information. Qualified: audit is based on an audited, financial information when assets are with a bank or trust company the auditor does not need to audit the financial data that is provided by their institution because they have their own regulations.

Most plans are exempt from audit requirements. To be exempt from an audit, a small plan has to satisfy what two conditions?

1) 95% Rule: 95% + of Plan assets must be invested in qualifying plan assets or covered by fidelity bond. 2) SAR must include info pertaining to: A) the financial institution that holds plan assets B) the insurance company that issued the bond

The six categories of qualifying plan assets are:

1) qualifying ER 2) Participant loans 3) assets held by regulated institution 4) shares issued by an investment company registered under ICA1940 (Re mutual fund) 5) investments, an annuity contracts issued by insurance company 6) assets in Participant account where the participant can direct the investment account

ERISA requires that every person who handles plan funds be covered by what

Fidelity bond that covers 10% of the plant assets

What is the minimum amount of bond coverage? What is the maximum amount?

No less than $1000 $500,000

What are the bond types?

An individual bond, Schedule bond A blanket bond

What does the individual bond cover

The named individual

What does the schedule bond cover?

A number of named individuals or each of the occupants of positions listed in the schedule

What does a blanket bond cover?

Covers all the insured officers and employees with no schedule a blanket bond may include an agent rider which covers ask by other persons to him covered functions are delegated, such as administrators, her other service providers

Does the bond protect the service provider?

No, it does not. It only protects the front of the plan.

Is there a box on the form 5500 to indicate it’s the final return?

No, there is not

When is the final 5500 due?

In the year, the final distribution of assets occur

When is the 5500 due after the final assets are distributed?

On the last day of the seventh month after assets are distributed This will be a short year plan

Form 5500 filing and other reporting disclosure requirements fall under what ERISA title

Title 1

Form 5500 EZ filings are not subject to title I, True or False?

True, but they are still required under IRS rules

Can form 5500 EZ‘s be aggregated with other plans for testing purposes?

Owner only companies that would file a form 5500 cannot be aggregated with other plans.

What is the minimum asset level required for a form 5500 EZ filing?

250,000

What employer-sponsored plans do not have to file a form 5500?

Government and public education Churches not covered by ERISA SEPS and simple IRA’s Non-qualified plans ERISA exempt 403B plans

For an employee who terminates with a deferred vested balance, what would be three reasons why the participant would not be included on the 8955 SSA?

1) Payment commenced 2) Participant returned to work 3) Benefits forfeited

What is the IRS penalty for a late 5500 filing? What is the limit?

$250 per day up to a maximum penalty of $150,000

What is the DOL penalty for a late 5500 filing per Day? What’s the limit?

A penalty up to $2400 per day with no limit as to a maximum accrued penalty

Do DOL penalties apply to late form 5500 EZ?

No, because they are not subject to the DOL, only the IRS

The basic late filing penalty under DFVCP is

$10 per day

The per day penalty under the DFVCP runs from what date?

The date the filing was due without regard to extensions

Under the DFVCP, what is the maximum small filer penalty for a single late form 5500?

$750

Under the DFVCP, what is the maximum penalty for a single late form 5500 for a large filer?

$2,000

What is the maximum cap for DFVCP costs for multiple late filings, both for small and large plan?

Small is $1500 Large is $4000

Does the IRS offer penalty relief in addition to the DFVCP?

Only for Owner Only-5500 EZ - $500 for each delinquent plan up to a maximum of $1500

What are some examples of non-qualified 401k plan assets (there are five)

Coins and collectibles Real estate Commodities Privately held commodities Privately held debt instrument