Instructions for Form 5500-EZ |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Form 5500-EZ is a simpler form that you can use if you have a one-participant retirement plan and you meet the five conditions
listed under
Who May File Form 5500-EZ. If you do not meet the five conditions, see Form 5500, Return/Report of Employee Benefit Plan, for
reporting requirements.
Retirement plans can be either defined contribution plans (which include profit-sharing plans, money purchase pension plans,
stock bonus plans, and
employee stock ownership plans (ESOPs)) or defined benefit pension plans.
Who May File Form 5500-EZ
You may file Form 5500-EZ instead of Form 5500 if you meet all of the following conditions:
-
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 4.
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.
You do not have to file Form 5500-EZ (or Form 5500) for 2006 if you meet the five conditions above and the plan does not have
an Accumulated
Funding Deficiency (as defined in section 412(a)(2)) for the plan year, and
You have a one-participant plan that had total plan assets of $100,000 or less at the end of every plan year beginning on
or after January 1, 1994,
or
You have two or more one-participant plans that together had total plan assets of $100,000 or less at the end of every plan
year beginning on or
after January 1, 1994.
Example.
If plan assets in a plan that otherwise satisfies the requirements for filing the Form 5500-EZ totaled $110,000 at the end
of the 2005 plan year,
and a distribution occurred in 2006 so that total plan assets were $85,000 at the end of the 2006 plan year, a Form 5500-EZ
must be filed for the 2006
plan year and for all following years because plan assets in the prior year exceeded $100,000.
Note.
All one-participant plans must file a Form 5500-EZ for their final plan year even if the total plan assets have always been
less than $100,000. The final plan year is the year in which distribution of all plan assets is completed. Check the “final return” box at the
top of Form 5500-EZ if all assets under the plan(s) (including insurance/annuity contracts) have been distributed to the participants
and
beneficiaries or distributed to another plan.
One-participant retirement plans that are required to file should complete and file Form 5500-EZ for the first year that it
is required to be filed
and for every plan year thereafter.
Note.
Effective beginning with calendar plan year 2005, filers of Form 5500-EZ are no longer required to file any schedules or attachments
(including the
Schedule B (Form 5500)) with the Form 5500-EZ. Filers, however, must collect and retain completed and signed Schedule B, if
applicable. This change
does not eliminate the requirement to both perform an annual valuation and maintain the funding standard account for all plans
subject to the minimum
funding requirements of section 412.
File the 2006 return for plan years that started in 2006. The Form 5500-EZ must be filed by the last day of the 7th calendar
month after the end of
the plan year that began in 2006 (not to exceed 12 months in length).
Note.
If the filing due date falls on a Saturday, Sunday, or Federal holiday, the return may be filed on the next day that is not
a Saturday, Sunday, or
Federal holiday.
You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns
and payments. The private delivery services include only the following:
-
DHL Express (DHL): DHL Same Day Service, DHL Next Day 10:30 am, DHL Next Day 12:00 pm, DHL Next Day 3:00 pm, and DHL 2nd Day
Service.
-
Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and
FedEx
International First.
-
United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide
Express Plus,
and UPS Worldwide Express.
The private delivery service can tell you how to get written proof of the mailing date. See Where To File for the street address when
using a private delivery service.
Extension of Time To File
A one-time extension of time to file Form 5500-EZ (up to 2½ months) may be obtained by filing Form 5558, Application for
Extension of Time To File Certain Employee Plan Returns, on or before the normal due date (not including any extensions) of
the return. You
must file Form 5558 with the IRS.
Approved copies of the Form 5558 will not be returned to the filer. However, a photocopy of the completed extension request
that was filed must be
attached to the Form 5500-EZ.
File Form 5558 with the Internal Revenue Service Center, Ogden, UT 84201-0027.
Exception.
One-participant plans are automatically granted an extension of time to file Form 5500-EZ until the extended due date
of the Federal income tax
return of the employer (and are not required to file Form 5558) if all the following conditions are met: (a) the plan year and the
employer's tax year are the same, (b) the employer has been granted an extension of time to file its Federal income tax return to a date
later than the normal due date for filing the Form 5500-EZ, and (c) a copy of the application for extension of time to file the Federal
income tax return is attached to the Form 5500-EZ. Be sure to check box B at the top of the form. An extension granted by
using this exception
cannot be extended further by filing a Form 5558 after the normal due date (without extension) of Form 5500-EZ.
For a short plan year, file a return by the last day of the 7th month following the end of the short plan year. Modify the
heading of the form to
show the beginning and ending dates of your short plan year and check box A(4) for a short plan year. If this is also the
first or final return, check
the appropriate box (box A(1) or A(3)).
File the Form 5500-EZ at the address indicated below.
Address for filing on paper
EBSA
P.O. Box 7042
Lawrence, KS 66044-7042
Address for filing on floppy disc, CD-ROM, or tape
EBSA
P.O. Box 7041
Lawrence, KS 66044-7041
By private delivery service:
Address for filing on paper, floppy disc, CD-ROM, or tape
EBSA
Attn: EFAST
3833 Greenway Drive
Lawrence, KS 66046-1290
Paper and Electronic Filing
As described in more detail below, the 2006 forms are available in two computer scannable formats: machine print and hand
print (the questions are the same).
Filers can choose a machine print format that is completed by using EFAST approved computer software that produces computer
scannable 2-D bar codes
on the bottom of each page. Machine print forms can be filed on paper, magnetic tape, floppy diskette, or CD-ROM by mail (including
certain private
delivery services) or filed electronically by approved EFAST transmitters (authorized transmitters of forms by modem or file
transfer protocol).
Filers can also choose a hand print format that can be completed in one of two ways. You may complete the IRS printed paper
forms by hand or
typewriter. You may also choose to complete the hand print form by using computer software from EFAST approved vendors.
Computer-generated forms CANNOT be printed out blank, or with limited information, and then completed by pen or typewriter.
These forms
must be completed entering the data by computer.
The hand print format uses special printing standards that enables EFAST to scan the hand, typewritten, and computer entries
and must be filed by
mail (including certain private delivery services). Hand print forms are available from the IRS as discussed in How To Get Forms and Related
Publications on page 1. See
www.efast.dol.gov for a list of approved software vendors.
Form 5500-EZ Completed by Pen
Use only the official hand print form. Enter only a single letter or number within each box using blue or black ink. Abbreviate
if necessary. Where
numbers are required, do not enter dollar signs, commas, or decimal points. To indicate a negative number, enter a minus sign
“-” in the
box to the left of the number. See example below.
Form 5500-EZ Completed by Typewriter
Use only the official hand print form. Type within the row of boxes and ignore the vertical lines between the boxes. The number
of entries should
not exceed the number of boxes (e.g., if there are 13 boxes, the numbers or letters entered should not exceed 13). Abbreviate
if necessary. Where
numbers are required, do not enter dollar signs, commas, or decimal points. See the example of a typewritten positive number
below. To indicate a
negative number, enter a minus sign “-” in the box to the left of the number.
Form 5500-EZ Completed by Using Computer Software
Use only software from an approved software vendor, which may produce either a machine print or hand print form.
All forms completed using computer software must be submitted on paper (except for machine print forms submitted electronically, as
described below). Paper filings must be printed on only one side of standard 8½ by 11 inch paper and mailed to the address
listed under
Where To File on this page.
To submit a machine print Form 5500-EZ electronically, use only software from an approved software vendor. An electronic signature
and an
encryption key must be obtained by filing the Application for EFAST Electronic Signature and Codes for EFAST Transmitters and Software Developers
Form EFAST-1. You may, following the software's instructions, either (a) save the completed machine print Form 5500-EZ to a 3.5 inch
floppy disc, CD-ROM, 4mm or 8mm DAT, 3480 or 3490 cartridge, or 9-track tape and submit the Form 5500-EZ by mail or private
delivery service or
(b) submit by modem or FTP.
See
www.efast.dol.gov for a list of approved software vendors, the Form EFAST-1 and additional information.
File an amended Form 5500-EZ to correct errors and/or omissions in a previously filed annual return for the 2006 plan year.
The amended Form
5500-EZ must conform to the requirements in this How To File section.
If you are filing a corrected return in response to correspondence from EBSA regarding processing of your return, do not check the box
for “an amended return” (Part I, box A(2)) on Form 5500-EZ.
The procedure for amending the return depends upon the type of form filed as specified:
Submit a completed, signed, and dated Form 5500-EZ (be certain to check box A(2)).
Submit a completed and dated Form 5500-EZ with electronic signature (be certain to check box A(2)). See the DOL website at
www.efast.dol.gov for information on electronic filing of amended returns.
The plan administrator or employer (owner) must sign and date Form 5500-EZ.
The Internal Revenue Code imposes a penalty of $25 a day (up to $15,000) for not filing returns in connection with pension,
profit-sharing, etc.,
plans by the required due date.
Actuaries of defined benefit plans subject to the minimum funding standards for this plan year must complete Schedule B (Form 5500),
Actuarial Information, and forward the completed schedule to the person responsible for filing the Form 5500-EZ. The completed
Schedule B is subject
to the record retention provisions of these instructions. See the instructions for Schedule B (Form 5500).
Organizations defined in Affiliated Service Group or Controlled Group of Corporations and a Group of Trades or Businesses Under
Common Control must file Form 5500 rather than Form 5500-EZ.
In general, two or more businesses may be an affiliated service group if: (a) one or more of the businesses (or the shareholders,
officers, or highly compensated employees of one or more of the businesses) has an ownership interest in any of the other
businesses, and
(b) any of the businesses provide services to any of the other businesses (or the businesses are associated to provide services
to third
parties). If this applies to your business, read the rest of this definition for more details.
Section 414(m)(2) defines an affiliated service group as a group consisting of a service organization (referred to below as
the “first service
organization” (FSO)) and:
-
A service organization (A-ORG) that is a shareholder or partner in the FSO and that regularly performs services for the FSO
or is regularly
associated with the FSO in performing services for third persons and/or
-
Any other organization (B-ORG) if:
-
A significant portion of the business of that organization consists of performing services for the FSO or A-ORG of a type
historically
performed by employees in the service field of the FSO or A-ORG, and
-
10% or more of the interest of the B-ORG is held by persons who are officers, highly compensated employees, or owners of the
FSO or
A-ORG.
An affiliated service group also includes a group consisting of: (a) an organization whose principal business is performing management
functions on a regular and continuous basis for another organization (or one organization and other related organizations),
and (b) the
organization (and related organizations) for which such functions are performed. See section 414(m)(5).
Controlled Group of Corporations and a Group of Trades or Businesses under Common Control
These are corporations or unincorporated businesses in which there is common ownership or control by one or more individuals
or persons. See
sections 414(b) and 414(c).
Under section 414(n), a leased employee provides employee services for you that are performed under your primary direction
and control, the
individual provides services on a substantially full-time basis for at least a year, and the services are provided pursuant
to an agreement between
you and a leasing organization.
Generally, a disqualified person in the case of a sole proprietorship or partnership includes you, your partners, your relatives
and your partner's
relatives, and other businesses in which you, your partners, or the partnership have an interest. In the case of a corporation,
another corporation in
which your corporation has an interest may be a disqualified person.
Specifically, the term “disqualified person” means:
-
Any fiduciary (including, but not limited to, any administrator, officer, trustee, or custodian), or counsel;
-
A person providing services to the plan;
-
An employer any of whose employees are covered by the plan;
-
An employee organization any of whose members are covered by the plan;
-
An owner, direct or indirect, of 50% or more of: (a) the combined voting power of all classes of stock entitled to vote or the
total value of shares of all classes of stock of a corporation, (b) the capital interest or the profits interest of a partnership, or
(c) the beneficial interest of a trust or unincorporated enterprise, which is an employer or an employee organization described
in
paragraph 3 or 4;
-
A member of the family (as defined in section 4975(e)(6) of the Internal Revenue Code) of any individual, described in paragraph
1, 2,
3, or 5;
-
A corporation, partnership, or trust or estate of which (or in which) 50% or more of: (a) the combined voting power of all
classes of stock entitled to vote or the total value of shares of all classes of stock of such corporation, (b) the capital interest or
profits interest of such partnership, or (c) the beneficial interest of such trust or estate is owned directly or indirectly, or held by
persons described in paragraph 1, 2, 3, 4, or 5;
-
An officer, director (or an individual having power or responsibilities similar to those of officers or directors), or a 10%
or more
shareholder, directly or indirectly, of a person described in paragraph 3, 4, 5, or 7; or
-
A 10% or more (directly or indirectly in capital or profits) partner or joint venturer of a person described in paragraph
3, 4,
5, or 7.
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