How complicated is reporting to the IRS?

If you have over $250,000 in assets, there’s a form (5500) that has to be filled out. And if you don’t, you might still want to fill it out. It’s not complicated. You’re basically saying, “Here’s the assets, here’s the value,” and there you go. Many accountants can take care of it for you or we can assist with it.

What are the ongoing responsibilities and costs involved in administration of the eQRP?

Once your plan is set up you’ll generally have minimal expense or responsibilities. You are required to file a form 5500 with the IRS if the plan has assets of $250,000 or more. If the plan has less than $250,000 and less than 100 employees you are not required to file.

If you do file the form you can file the form online here or you can have your CPA do it, which we recommend.

Assets such as real estate or precious metals require annual valuation via some type of third party appraisal to comply with plan asset value reporting.

Who is the administrator? What are the duties of an administrator?

By default the plan sponsor or business owner is generally the administrator. You may also hire a 3rd party to be the administrator.

Duties include:

  • Making contributions in accordance to the plan.

  • Keeping the plan up to date and in compliance with all retirement plan laws.

  • Investing plan assets according to the plan guidelines.

  • Providing information and required disclosures to plan participants.

  • Distributing benefits in accordance with the plan.

  • Informing eligible employees about the plan.

Under law how long must plan administer or plan provider keep 401(k)-related records?

Records must be retained for 6 years. Records used to compile information that is required to be reported under the reporting and disclosure rules must be preserved by plan administrators (and by actuaries, accountants and others who may be involved) for 6 years after the due date for filing the documents to which they relate (ERISA Sec. 107). These records must have sufficient detail to permit the necessary basic information and data to be verified, explained or clarified for accuracy and are to include vouchers, worksheets, receipts, and applicable resolutions.

Accidental destruction of records will not discharge the persons required to retain records from their statutory duty with regard to the purposes for which such records are required to be retained. Where persons required to retain records know or should know that such reconstruction is impossible, or possible only at an excessive or unreasonable cost, such persons would not be under a duty to reconstruct or attempt to reconstruct the lost or destroyed records.

Do I have to file anything with the IRS?

YES, after your eQRP is setup you will need to file Form 5500 once a year if your plan assets are over $250,000, otherwise you are exempt from mandatory filing.

For the 2018 year if my company is a Sole Proprietorship, LLC or Corporation how much time do I have to make contributions to my plan and receive the tax deduction?

You have until you file your corporate tax return in 2019, including any extensions

What is a 990T?

It’s the form to report Unrelated Business Income Tax. If your eQRP had active income that was taxed you would likely use this form.