Who Qualifies For Form 5500-EZ?
The requirements below are from the 2008 Form 5500-EZ instructions (for more information, please see the full on-line 5500-EZ instructions).
- The plan is a one-participant plan. This means either:
- The plan only covers you (or you and your spouse) and you (or you and your spouse) own the entire business. (The business may be incorporated or unincorporated); or
- The plan only covers one or more partners (or partner(s) and spouse(s)) in a business partnership.
- The plan meets the minimum coverage requirements of section 410(b) without being combined with any other plan you may have that covers other employees of your business. See the instructions for line 14c for more information.
- The plan does not provide benefits for anyone except you, or you and your spouse, or one or more partners and their spouses.
- The plan does not cover a business that is a member of:
- An affiliated service group,
- A controlled group of corporations, or
- A group of businesses under common control.
- The plan does not cover individuals of a business that uses leased employees. For an explanation of the technical terms above, see Definitions on page 5.
If you do not meet all five of the conditions listed above, file Form 5500 instead of Form 5500-EZ. If you meet all five of the conditions, read Who May Not Have To File.”
Companies that do not qualify for Form 5500-EZ include the following.
- Corporations with multiple owner-employees who are not married. Corporations with two unmarried owners who are participants in the Owner K do not qualify for Form 5500-EZ, even if there are no other employees.
- Owner-only companies when children of the owners are eligible for the plan. It’s important to remember that children who meet the plan’s eligibility requirements are participants of the plan even if they are not deferring and have no account balance in the plan.
- Companies that are part of a Controlled or Affiliated Group of companies. For example, if the 100% owner of a company sponsoring an Owner K also owns 100% of a second operational business, the two companies constitute a “Controlled Group,” and the first company is not eligible to file Form 5500-EZ, even if neither company has other employees.
Please note that these situations are subject to full Form 5500 reporting requirements, as well as additional fees (see Benetech’s fee schedule).
When Can A Form 5500-EZ Not Be Filed?
If an ongoing plan meets the requirements in the EZ instructions, and if it is the only plan sponsored by the company, a Form 5500-EZ need not be filed until assets exceed $250,000.
However, there are important considerations to keep in mind when determining if a plan must submit/file Form 5500-EZ (for more information, please consult the on-line 5500-EZ instructions on this topic):
- Assets from all plans sponsored by the employer must be aggregated for this purpose. If combined assets from all plans exceed $250,000, then a Form 5500-EZ must be filed for each plan, even if a plan’s assets, when considered alone, does not exceed this limit.
- Rollovers into the plan, outstanding loan balances, and contributions receivable for the year are included when evaluating this limit. For example, if an owner rolls $250,000+ into a new Owner K in the first year, the plan is required to file a Form 5500-EZ beginning with its first year.
- Final year plans must file a Form 5500-EZ regardless of plan assets. A terminating owner-only 401(k) plan that does not file a final Form 5500-EZ is subject to penalty fees and other possible sanctions.