Form 5500 Reporting
Employers that maintain qualified plans (QRPs) must file an annual report with the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) (IRC Sec. 6058a and ERISA Sec. 104). To meet this requirement, the DOL, IRS, and Pension Benefit Guaranty Corporation (PBGC) jointly designated Form 5500 to gather among other things, detailed information concerning a plan’s financial condition and operations.
Who Must File
The employer (referred to as a “plan sponsor for Form 5500 purposes) is responsible for filing the annual 5500 series return. As part of our annual maintenance services, My Solo 401k Financial will generate and file the Form 5500.
The Deadline for filing the appropriate Form 5500 series return is the last day of the seventh month following the close of the plan year. For example, unless and extension applies, employers with calendar year plans must file Form 5500 on or before July 31 of the following year. When a short plan year occurs (e.g., if a plan is terminated and all assets are paid out before the end of the normal plan year), employers must file the appropriate Form 5500 series return by the last day of the seventh month following the close of the short plan year.
What to File
Form 5500 consists of a two-page form with customized schedules for use by both small and large employers. Self-Directed Solo 401k plans file Form 5500-EZ when required.
The IRS may asses a penalty of $25 per day (up to a maximum of $15,000) for failure to timely file a Form 5500 series return, including Form 5500-EZ, for a qualified retirement plan.
Form 1099-R Reporting
Anytime a plan participant or beneficiary takes a distribution, IRS reporting requirements apply. Payers must send a Form 1099-R to the IRS and to the individual receiving the distribution.
Payers generally must submit Form 1099R to the distribution recipient by January 31. The form is due to the IRS by February 28.
Filing Form 1099-R with the IRS
Employers must file IRS Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to transmit paper Forms 1099-R.
Types of Distributions
Beneficiary Distributions: When a distribution is made to a beneficiary, the employer must report the distribution to the IRS on Form 1099R. The distribution is always reported in the beneficiary’s name and Social Security number. A separate Form 1099-R is generated to report each individual beneficiary’s distribution.
Roth 401k Designated Account Distributions: Employers must use a separate Form 1099-R to report a designated 401k Roth account distribution. The instructions to Forms 1099R include specific instructions on coding distributions from designated Roth accounts.
Required Minimum Distributions: once an individual reaches age 70 ½, she must being taking QRP distributions annually. If a participant fails to take the required minimum, she is subject to the excess accumulation penalty tax.