Form 5500-EZ Example: Complete in a Few Easy Steps!

Form 5500-EZ is a little known form. That’s because many retirement plans are exempt from filing it. When required, it is often done by the third party administrator (TPA). Let’s take a look at a Form 5500-EZ example so you understand the requirements.

Form 5500-EZ is required for a one-participant plan unless an exception is met. A one-participant plan is defined as a retirement plan (defined contribution plan or defined benefit plan) that:

  1. Covers just you or your spouse and you (or your spouse) are the only business owners; or
  2. In a business partnership, covers only the partners (or partners and spouses); and will not provide retirement benefits for any employees except for you (or a spouse) or partners (or spouses).

However, small plans are excluded from the filing requirements. Form 5500-EZ is not required for one-participant plans if the total plan assets (and assets of all other one-participant plans held by the company) are less than $250,000. The one exception to this rule is that a filing is required in the final year of a plan regardless of plan assets.

To determine the $250,000 threshold, use the total plan assets as of the end of the year. This is listed on line 6a(2). If the  employer has multiple one-participant plans, the assets of all the plans must be combined to determine whether the $250,000 threshold is met.

Form 5500-EZ is often used for small cash balance plans and solo 401ks. It is not for Employee Stock Ownership Plans (ESOPs).

Form 5500 EZ Example: Part I:

Form 5500 EZ Example

Part I is relatively straightforward. If it is a first or final year filing then the corresponding box will be checked in section A. If you are correcting a prior return then make sure that you check the box for amended return.

It is important to note that you would only check box A(3) if all of the assets of the plan have been distributed out to participants (or beneficiaries) or transferred to another plan. Accordingly, the final year is the year in which distribution of all plan assets is finalized.

Check box B when either of the following is applicable: (1) you have filed for a 2 1/2 month extension using Form 5558; or (2) you are basing your extension on the extended due date of your federal tax return.

The IRS late filer relief program is a program that is set up specifically for late pension filers. You can find out more about that program here.

Form 5500 EZ Example – Part II:

Form 5500-EZ Example

The name of the plan should be self explanatory. The plan would be titled something similar to “ABC Company 401k Profit Sharing Plan.”

For line 1b you should enter the three-digit plan number that the employer has assigned to the retirement plan. Plans are consecutively numbered and start with “001.” Once a plan number is assigned, it must be used for all subsequent 5500 filings  and cannot be used for any other retirement plan (even if the plan is subsequently terminated).

For line 1c enter the date the plan first became effective. You may need to reference the original plan adoption agreement.

For line 2a-2d enter the employer info such as name, address, telephone # and employer identification #. For line 2d enter the six-digit code that describes the nature of the plan sponsor’s business from the list of principal business activity codes. You can find those codes here.

Form 5500 EZ Example – Part II 3a to 4d:

Form 5500 example

Line 3 is where you include information about the plan administrator. If a third-party administrator completes the 5500-EZ they will include their information here. Otherwise, if this is the company then write “same.”On line 3b the plan administrator will include the nine-digit EIN.

Lines 4a–4d is used for a change in employer information. This does not happen often but should the employer’s name or the plan name change since the last plan return was filed, enter the information as it was stated on the last plan return that was filed.

Form 5500 EZ Example – Part II 5a to 5c:

Form 5500

In this part of the form, we take a look at the total number of participants and total active participants. This needs to be disclosed as of the beginning and ending of the plan year.

A participant is defined as an active participant (defined later), retired or separated participant covered under the plan and who are receiving benefits, a retired or separated participant who is entitled to receive benefits in the future or beneficiaries of deceased participants who are receiving or able to receive benefits under the plan.

Line 5c is a little more involved. You must include any participant who terminated employment during the year and received a cash distribution or deemed cash distribution of any accrued retirement benefit that is not subject to forfeiture.

Form 5500 EZ Example – Part III:

Part III is the section that contains the financial information. You must include the plan asset and liability balances as of the beginning of the year and end of the year.

“Total plan assets” would include transfers and rollovers from other retirement plans along with any unrealized gains and losses on those plan assets. It not only includes mutual funds, stock and bond assets but also alternative asset balances like business interests, real estate, loan balances (including participant and non-participant), and tangible personal property.

Few plans filing form 5500-EZ will have liabilities. These include benefit claim liabilities, operating payables and liabilities, and any acquisition indebtedness. You would not include the fair value of future participant distributions.

Once you subtract assets from liabilities you end up with net plan assets. This is also called net plan equity under the rules.

Form 5500-EZ Example – Part III (continued):

Starting page 2 of the 5500-EZ is the continuation of financial information disclosure. Enter the any contributions that are received or receivable by the plan. This would include both amounts from employers and participants.

On line 7c enter the amount of any additional contributions that would include rollovers and transfers that were received from other plans. The amounts should use a valuation based on the contribution date.

Form 5500 EZ Example – Plan Characteristics

This section can be a little confusing. Just enter the applicable plan characteristics codes that apply. You can see the codes here.

Form 5500-EZ Example – Part V:

In Part V we take a look at the compliance and funding questions. For most plans these are basic yes or no answers. But you do need to include specific amounts when applicable.

Line 9 – Check “Yes” if there were any outstanding participant loans during the year and enter the outstanding loan balance as of year end. Include unpaid loan balances, plus any accrued interest. Any loans that have been deemed distributed would not be included on line 9.

Line 10 – Check “Yes” if the plan is a defined benefit pension plan (including cash balance plan) and subject to a minimum funding requirement according to section 412.

Line 10a – Since the plan would be subject to actuarial review, you must enter the unpaid minimum required contribution from line 40 of Schedule SB (Form 5500). The actuary must finalize and sign Schedule SB no later than the filing due date. The form must then be given to the person responsible for the tax filing.

Line 11a – This is where you enter information regarding minimum funding requirements. Should a minimum funding waiver for a prior year be amortized in the current year, you should enter the date the letter ruling was granted.

Form 5500 EZ Example – Signature:

The final section is self explanatory. Note that the 5500 can be signed by the company or the plan administrator. Just make sure that you print the name of the person signing the return.

So there you have it. We have walked through a Form 5500-EZ example. With this guidance, you may believe that you can tackle the return yourself. But make sure that you do your diligence. If you have any issues be sure to contact a qualified third party administrator for assistance. Before you dive right in and complete the form, make sure you are completing the proper 5500 and that you have a filing requirement.

What is a 5500 form return and do I have to file one?

The Form 5500-series of returns were jointly developed by the IRS, DOL, PBGC to satisfy the annual reporting requirements under ERISA for employers that maintain a qualified retirement plan. Qualified retirement plans include cash balance and other defined benefit plans, and defined contribution plans, such as profit-sharing, and 401(k) plans. SIMPLE and SEP plans do not have to file this form. The 5500-form return is due on the last day of the seventh month following the end of the year of the plan.

5500-ez filing

For example, a December plan year-end would be due on July 31. The plan’s year end date should be the same as the end of the company’s fiscal year date. An extension can be granted for an additional 2½ months. For a December year-end with a valid extension, the return would be due on October 15. The 5500 form is required to filed with both the IRS and the DOL.

Another important point to note is the filing requirements for Mega Backdoor Roth IRAs. The rollover amounts have special reporting requirements.

Which version do I file?

The version of the form that would be required is as follows:

  • Form 5500―Employers with more than 100 participants at the beginning of the plan year. This requires Schedule H–Financial Information to be completed and also requires to be audited by an independent Certified Public Accountant.
  • Form 5500 SF (short form) ―Employers with less than 100 participants at the beginning of the plan year may be eligible to file this form.
  • Form 5500 EZ―Annual return (paper filed) for One Participant Plans maintained outside the U.S. For the benefit of a nonresident or U.S based plans that have total plan assets that exceed $250,000 at the end of plan year. It is important to note that one participant plans can include both the owner and their spouse. Follow the Form 5500-EZ example above.

What if I don’t file?

As stated earlier, Form 5500-EZ return is unique to other returns in that it is required to be filed with both the IRS and the DOL. As a result, both entities can impose penalties for returns not filed, filed late or even incomplete. As with any failure to file penalty, the cost of not filing can be can be very expensive. The IRS may charge $25 per day penalty (up to $15,000) for not filing returns of certain plans and $1,000 for failure to file actuarial statement. The DOL may add an additional penalty of $2,063 a day.

Applicants in the one-participant plan can now use the paper-based form 5500-EZ to report retirement plan information to the IRS. The solo 401k plan does not depend on the guidelines given by ERISA Title I which only covers certain individuals. These include the owners, their spouses, the partners and their spouses in case of business partnerships.

This also includes the owners of a full business organization whether incorporated or not. An interesting thing about the retirement plan is that it has certain conditions regarding its one-participant rule. It will only remain a one-contributor plan if the owner, his/her spouse and respective partners and their spouses benefit from it.

The 5500-EZ form also extends to those individuals who maintain their retirement plans for benefiting people residing outside the US. Such individuals are subject to file this form as a replacement to the Form 5500. The Solo 401k account balance must be over $250,000 to file the form. This amount includes cash and non-liquidated assets as well as of the end of the plan year. If in case your balance is less than $250,000 at the end of the year, you won’t have to file the form. You will only have to file it in case you have ended your solo 401k account.

The Filing Address

After filling the form, the participants are required to file the form at the correct address. File the 5500-EZ forms at:

Department of the Treasury, Internal Revenue Service, Ogden, UT 84201-0020.

If you need copies of previously filed 5500-EZ forms, the IRS requires written requests. Another method is by requesting on Form 4506. For this, you will have to point to plan number on Line 7 alongside plan year in the form.  The written requests should include the plan year and the plan number both at the same time. There is a certain fee for each plan year request, mentioned in Form 4506. The request address is as follows:

Internal Revenue Service
1973 North Rulon White Blvd
Attn: EP Accounts M/S 6552
Ogden, UT 84404

Form 5500-EZ Quick Filing Guide

In summary, here are the guidelines for you to know:

  • First return – in the case of first time filling, check on the A(1) box. If filing on final return filing basis, check on box A(3). This is only valid if you have terminated your solo 401k.
  • Section 6a – in “Total Plan Assets” make sure to include other financial arrangements and transfers received from other schemes and IRAs. The current plan assets, as well as loans, are also included in the section. In the first column, you will have to enter the amount at the start of the year. The second column will include the total amount at the end of the year.
  • Section 7a – you are required to enter employer offerings of the previous year even if the offerings were to fill in this year.
  • Section 7b – fill in the salary deferrals.
  • Section 7c – fill in the total amount of financial arrangements from other schemes and IRAs.
  • Section 8 – the required code is 3B.
  • Section 9 – check ‘Yes’ on ‘Plan Characteristics’. You are required to enter any available contributor’s outstanding loans during the plan year as well.
  • Section 9c – fill in the total employer offerings for the current plan year.

Keeping your retirement plan compliant is a critical task for the plan administrator and continue throughout the life of the plan. The penalties can be severe so it is important you have the knowledge needed to keep your plan compliant. The fact is most administrators, simply don’t have the knowledge to the tools needed to keep your plan compliant.

Paul Sundin

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