As an Investment Representative you've worked hard to build trust with your pension clients. Now, you can solidify that long term relationship with your expertise on one of the greatest fears of small business retirement plan sponsors.
Next to an audit, nothing frightens retirement plan sponsors more than a notification letter from the Dept of Labor regarding inadequacies in their responses on the Form 5500 or 5500-EZ filing. Inadequacies that, if not corrected within 30 days of the date of the letter, would subject the plan sponsor to substantial fines and penalties, not only from the Dept of Labor but from the IRS as well.
Following is a listing of the most common filing errors that will generate a letter from the Dept of Labor.
1. The Form 5500 Must Be Properly Signed And Dated
Make sure that you have the proper signatures by the Employer and Plan Administrator and dates on the Form 5500, Form 5500-EZ, and any attached schedules that require a signature (Schedules B: Actuary; P: Trustee; and Schedule SSA; Plan Administrator).
2. The Form 5550 Must Have The Proper EIN And Plan Number (PN)
It is critical that the Employer Identification Number EIN) used to identify the "plan sponsor" be the same year to year when completing line 2b of the Form 5500 or Form 5500EZ.
3. The Form 5500 Filing May Not Be For A Period Greater Than 12 Months
Be certain the time period entered in Part I of the Form 5500 is not greater than twelve months. If the plan is not reporting on a calendar year basis, then input the twelve-month fiscal year period in the spaces provided.
4. Use A Proper Business Code When Completing Line 2d Of The Form 5500
On Form 5500, Line 2d, be certain to enter a valid business code that best describes the nature of the plan sponsor's business. The only business codes that are valid for use in answering Line 2d are listed in the Form 5500 filing instructions section marked "Codes for Principal Business Activity".
5 Use The Correct Plan Characteristics Codes On Line 8 Of The Form 5500.
On Form 5500, Line 8, you must check box A to indicate if the plan is providing pension benefits. You must enter the Plan Characteristics Codes in the space provided beneath box A. These codes describe the type of pension benefits provided and other features of the plan. A list and description of the Plan Characteristics Codes is in Section 6 of the Instructions for Form 5500.
6. Properly Identify The Funding And Benefit Arrangements On Line 9 Of The Form 5500
Indicate all the proper Funding and Benefit Arrangements on Form 5500, Lines 9a and 9b. The "Funding Arrangement" is the method used for the receipt, holding, investment, and transmittal of plan assets prior to the time the plan actually provides benefits. The "Benefit Arrangement" is the method by which the plan provides benefits to participants. The responses on Lines 9a and 9b are cross-referenced against information on Schedules H, I, and/or A as appropriate. Be careful to attach the appropriate financial or insurance schedule (H, I, A) that corresponds to the Benefit and Funding Arrangements you indicate.
7. File All The Required Schedules And Attachments With Your Form 5500
Make sure you are filing all the required schedules and attachments with your Form 5500. If you check a box indicating that a schedule is attached, the schedule must be submitted with your Form 5500.
8. Schedule R And Distributions
You must prepare Schedule R only if there are any distributions or rollovers from the plan. You must enter both the EIN of the distribution payer and the EIN of the pension plan. Part 3 is only for money purchase plans that have made single sum distributions.
9. File The Appropriate Financial Information Schedule (H or I) With Your Form 5500.
Make sure you file the proper Financial Information Schedule with your Form 5500. The Schedule H is for "large plan" filers generally plans with 100 or more participants at the beginning of the plan year). The Schedule I is for "small plan" filers generally plans with fewer than 100 participants at the beginning of the plan year).
10. Complete the Participant Benefit Information on the Schedule SSA
Make sure that you list all of the terminated participants with their vested balances from the prior year that still have not been paid. Starting with the 2004 filing year, sponsors are required to list participants, previously outstanding, who have been subsequently paid.
When your client calls, anxious of a possible Dept of Labor fine, you can build long term credibility by taking charge of seeing the correction is made by the preparer. Better still, review or have an expert review, the Form 5500 before the client sends the forms into the Dept of Labor and save your client receiving any letter at all. Calendar year plans Form 5500 EZ and Form 5500 with related schedules are due by July 31, each year.
Lawrence Groves is the Director of the small business retirement administration services for the Retirement Group with the Solo 401k administration program at http://www.solo-k.com and the special 401(k) "Free for Three" ? administration program.
Lawrence comes to his clients with over 25 years as an experienced expert in plan design, administration, and compliance. Lawrence works closely with for profit, non-profit, and government agencies on 401(k), 403(b), 457, Profit Sharing, and Puerto Rican 165(e) small business plans.
Lawrence can be reached at http://www.solo-k.com or 727.844.7000
Culver prom limo ..Business card size works well for invitations to special events.What... Read More
Here are some of the questions that you need to... Read More
The efficiency of debt collection is the difference between a... Read More
If you are just starting your business, or if you... Read More
If small business had no important outside audiences, it wouldn't... Read More
While I was hard at work last week, an everyday... Read More
A janitorial cleaning service is one of the best businesses... Read More
Auto Detailing: Maintaining A Commercial Carpet ExtractorYou should drain your... Read More
The bad things starts with the letter 'O'?.like Obstacles, Obstruction,... Read More
Fuel prices these days are quite high and they take... Read More
A reader of one of my online sessions asked should... Read More
When should you create a foundation in order to solidify... Read More
The start of a new year is a time for... Read More
A common hazard faced by new entrepreneurs is a lack... Read More
Many of our nations 400,000 franchisees run their businesses out... Read More
We are noticing an increase in the length of time... Read More
Remember the training programs, seminars, and workshops you had to... Read More
Office support services can range from basic data entry to... Read More
Traditional advertising methods are still being used for almost 90%... Read More
One of the greatest pitfalls in e-commerce is Field of... Read More
You need to be visible to attract customers, right? But... Read More
Image of your franchise automotive outlet is so important. Some... Read More
If you're serious about wanting to start a business, the... Read More
Who is responsible for maintaining the business relationship?Nurturing a business... Read More
It has been discussed allowing Franchising companies to electronically disclose... Read More
Wood Dale limo ..When it comes to cost, how much can you afford... Read More
The restaurant industry in the United States employs an estimated... Read More
Don't let your customer satisfaction research initiative collect dust on... Read More
When working properly, computers enable small businesses to make big... Read More
The start of a new year is a time for... Read More
Many physical therapists in private practice have the appearance of... Read More
If you're just ramping up your small business email newsletter,... Read More
What does it take to grow a business and run... Read More
Most new small businesses won't be in business this time... Read More
Here is an interesting case study of a company, which... Read More
Last summer the FTC put forth a report and then... Read More
$elling $elling $ellingWhat makes a great sales person? Well, the... Read More
Here are some of the questions that you need to... Read More
Most pressure washing companies never look into some of the... Read More
Most small business owners are faced with so many responsibilities... Read More
1. Leadership Is Learned ? While many people appear to... Read More
Many small businesses do quite well due to the blood,... Read More
American small business is again in transition. Many employees, now... Read More
1. Don't Spend Too Much Time PlanningWhen you are entering... Read More
Obtaining a business credit card enables the small business owner... Read More
Get maximum results with minimum effort. Sounds great doesn't it?... Read More
In the Truck Washing Business every single type of vehicle... Read More
"So what?" is a lovely question.It can lead to a... Read More
Paper Shredding Business Opportunities are blossoming up everywhere because in... Read More
The book, "Become the Squeaky Wheel," by New Hampshire author... Read More
Small Business |