Retirement Plan Form 5500-EZ Return and Filing Form 5500-EZ

By | December 6, 2015

What is Form 5500-EZ?

The Form 5500 Series is a disclosure document for plan participants and beneficiaries. The Form 5500 Series is part of ERISA’s overall reporting and disclosure framework, which is intended to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards and that participants and beneficiaries, as well as regulators, are provided or have access to sufficient information to protect the rights and benefits of participants and beneficiaries under employee benefit plans.


Who needs to file Form 5500-EZ

A retirement plan sponsor may file a Form 5500-EZ if the plan:

  • covers you or you and your spouse and you and your spouse own the entire business, or
  • covers only one or more partners and their spouses in a business partnership, and
  • doesn’t provide benefits for anyone except you and your spouse or one or more partners and their spouses.


Who cannot file Form 5500-Ez?

If you’re eligible to file a Form 5500-EZ, you’re only required to file it if the total assets of all of your one-person plans is $250,000 or more at the end of the plan year, or this is the final year of the plan. Please take care when you complete these returns. There’s much more information on them than 10 years ago, so it’s a lot easier to make a mistake. If you make a mistake on the 5500-EZ return, you increase the chances that IRS will send you a letter


What is the IRS Employee Plans Compliance Unit?

For instance, we have an Employee Plans Compliance Unit. They don’t do audits, but they’ll check returns. And if there’s a trend that they see, they will send out compliance letters to you or to your clients and say, “Hey, we saw this on the return. This doesn’t look right. Can you please explain it?” And then you send a letter back saying, “Here’s the answer,” whether “It is wrong, we’ll correct it” or whatever the situation may be, and then they work with you to resolve it. We have a website that lists all the different projects that are ongoing and the ones that have been completed.


IRS Audit of Self Employed Retirement Plans

I strongly urge that if you or your clients receive a letter, please answer that letter, because most of the time what happens for people who don’t respond is we do switch it into an examination of a plan. We just had a project from this unit. The plans were marked as a final return and also showed that assets remained in the plan. The final year of the plan means that the plan has been terminated and all the assets should have been distributed, so we sent letters out when we saw those issues. Or maybe you’ve entered the wrong business code or tried to use one of the codes used on the Schedule C; you must use a business code as listed in the 5500-EZ instructions. If not, again, you might get a letter.


Common Problems with Form 5500-EZ

One problem area we’ve noticed on examinations of 5500-EZ filers is that you and your spouse must own the entire business to be eligible to file a 5500-EZ. If the plan is a RoBS, and that’s a plan where you transfer or rollover funds to your retirement plan and use that money to buy stock in the company, the plan owns that stock. Since you and your spouse don’t own the entire business, you cannot file the Form 5500-EZ. The 5500-EZ is an IRS form and you must file using a paper copy. Forms 5500 and 5500-SF are Department of Labor forms, and they must be filed electronically. In some cases, a 5500-EZ filer may electronically file using the 5500-SF. On our website,, we have a web page called the Form 5500 Corner that helps explain the plan’s filing requirements. If you do a search for “Form 5500 IRS” or “Form 5500 Corner,” it should take you to that page.


Problems Filling Out Form 5500

On the Form 5500 Corner, you’ll find links that take you to fillable 5500-EZ forms and instructions. Just download the form, complete it, print it, and mail it to the IRS per the instructions. For Form 5500 and 5500-SF filers, we have links to the instructions and to EFAST 2, which is Department of Labor’s electronic filing system. Over the years, the two reasons I heard most often for not filing their Form 5500-EZ return were, “I didn’t realize the assets had reached $250,000” and “I thought someone else was filing it.” Generally, plan sponsors expect their tax advisor might be filing the return, or maybe the prototype sponsor, the insurance agent, the stock broker. As a tax practitioner, if you notice your client’s taking a deduction for a retirement plan, you should ask to see a copy of their 5500-EZ for that year. If the response is, “Didn’t you file it?” they might have a problem. You all have probably heard that a few times, I’m sure. If you miss filing a Form 5500 series return with the IRS, there’s a penalty of $25 per day up to $15,000 per missed return and it takes, like, 600 days to reach that $15,000. And in the case of a really large corporation, $15,000 may not mean that much to them, but if you’re a one-person plan that didn’t file a Form 5500-EZ for that year, $15,000 could be a huge burden. And if you missed filing the return for three separate years, now you’re up to $45,000. That’s going to be a severe blow to just about any business. Now, IRS may abate penalties for reasonable cause, and I’ll say even on the camera that we often do, but there are no guarantees that you’ll get that.


Penalties for Failure to File Form 5500

Also DOL’s penalty for a delinquent 5500 or 5500-SF; that’s up to something, like, $1,100 a day now, so it’s pretty serious when you miss filing these returns. For that Form 5500 or the 5500-SF, those are filed with the Department of Labor. If you missed one of those filings with Department of Labor, you can enter the DOL’s Delinquent Filer Voluntary Correction Program. That’s available to file any missed returns and have those DOL penalties waived. However, to be eligible for relief from IRS penalties, you still need to file a Form 8955-SSA with the IRS. And remember that’s with the Form 5500 and the 5500- SF. And like Mikio said a while ago, you can get more information by going to the Form 5500 Corner on our web page.


Form 5500-EZ

Now, Form 5500-EZ is an IRS form that’s filed with the IRS and if you miss filing it, IRS now has a temporary program that’s available to correct that missed filing. Revenue Procedure 2014-32 established the Pilot Penalty Relief Program. It’s a one-year pilot program providing relief for plan administrators and plan sponsors for penalties that are related to failing to file the Form 5500-EZ. This program is only open until June 2, 2015. To be eligible for this program, you must have been eligible to file a Form 5500-EZ and not have received a penalty notice from the IRS for that delinquent 5500-EZ return. You’ll be required to file any late returns along with the required schedules and any attachments for those years. You are not required, however, to pay any penalties or fees under this program. However, in the top margin on that first page of each late Form 5500-EZ, you need to write in red above the title there, “Delinquent Return Submitted under Rev. Proc. 2014-32, Eligible for Penalty Relief.” And if you don’t write that on the return, it’ll be processed as a late return. There’s also a transmittal schedule that you’ll need to attach, and you’ll find all this in the Form 5500 Corner. Again, that’s You have until June 2, 2015, to uncover all your clients’ delinquent 5500-EZ returns. It really does appear to be a big problem, and this is our first relief program, I think, we’ve had on the EZs. What we really need is your help to get the word out on this new program. Next time you’re in a restaurant, like tonight, we want you to stand up and tell everybody about this 5500-EZ penalty relief program or you could share it with your peers, because I’m sure they have clients that have failed to file that return and this is a pretty good opportunity to get it straight going forward.