The SECURE Act and Form 5500 Filings

The SECURE Act extended the adoption deadline for new plans, but what about the IRS Form 5500 series filing??

For the first time, current law allows the adoption of a qualified plan after the end of the plan year. The SECURE Act allows a plan sponsor to adopt a plan for the 2020 plan (and tax) year any time before their extended tax filing date. For defined benefit plans, the window to adopt a plan is closing fast. Defined benefit plan contributions must be deposited by September 15, 2021 for a calendar year 2020 plan. Given the time involved with plan document drafting and calculation of contribution ranges, a plan sponsor needs to make the decision within the next few days if they want to make (and deduct) a contribution for 2020.

The IRS Form 5500 series due date is July 31st for a calendar year plan. The filing can be extended to October 15th if Form 5558 (application for extension of time to file certain employee plan returns) is filed by the July 31st deadline.

So the question I was mulling over as the July 31st (actually August 2nd this year) deadline loomed, was “What about 2020 plan year plans that didn’t exist by the Form 5500 deadline?” If a Form 5500 is filed by the extended due date but no Form 5558 was filed, would that trigger a letter from the IRS?

Apparently, I wasn’t the only one wondering and someone at the IRS realized the problem. Taking the “let’s deal with this later” approach, the IRS’ solution is to not require a new plan adopted after the close of the plan year to file a Form 5500 for that initial year. For defined benefit plans, this means that the second year Form 5500 filing will include two Schedules SB – one for the initial year of the plan and one for the filing year.

The guidance wasn’t released until August 6th, so in our office we filed Form 5558 extension for new 2020 plans adopted after December 31, 2020 and before July 31, 2021. We will be completing Form 5500 filings for these plans so we don’t get the IRS letter asking where is the Form 5500 that goes with the extension…

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