Help with 5500-EZ - Have Questions

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Topic Author
catchinup
Posts: 656
Joined: Sun Dec 31, 2017 5:35 pm

Help with 5500-EZ - Have Questions

Post by catchinup »

Hi Friends, 2020 will be my first year filing 5500-EZ. I have several questions and concerns. I below are images of the 2020 activity in my 401k and how I *think* my 5500-EZ should look. I have 2 sub-accounts in my 401k. One is for tax deferred contributions. Amounts for those transactions are color-coded in Blue. The other sub-account is for my voluntary after tax contributions. Amounts related after tax activity are color-coded in green.

Note: I started 2020 with a $17K (plus $1 interest) balance in the voluntary after tax account which was deposited in 2019 as a 2019 after tax employee contribution. During 2020 took distributions of that amount plus the interest into my Roth IRA. The administrator of my 401k (me) filed a 1099 for the distribution.

In the left hand column of the 2020 activity I posted questions. I have particular concern about the amount to report in box 7A since the Employer contribution includes a $20K contribution for tax year 2019. Even though this $20K contribution was reported on Line 17 of my S-Corp's 2019 1120-S, I'm concerned that the total contribution (employer + employee) exceeds the 2020 max of $63,500. Should I be concerned? Incidentally, my CPA has filed an extension on my 2020 1120-S, so if I file the 2020 5500-EZ in advance of the 2020 1120-S, I don't know how the IRS will be able to verify the 2020 employer contribution amount.

Regarding my question #4 - I 2020 I swept my Vanguard SEP-IRA into the tax deferred sub-account of my 401k. After the initial sweep, some additional $578 in gains were swept in. My Fidelity statement is including this $578 as a "Contribution". However the 1099 Vanguard sent me for this distribution matches what I'm showing in 7C -- in other words, it excludes the $578. I'm concerned because if the $578 is a "contribution" then my total 2020 contributions exceed the maximum allowable for 2020 of $63,500.

Regarding the $14K voluntary after tax contribution and $17,009 in service distributions - it bothers me that there is no place to report these separately on the 5500-EZ and that there is also not a place on the 1040 to report the voluntary after tax contributions. I did make sure my salary covered these amounts, but the only thing I have to show for the voluntary after tax contributions are my paper records.

Thanks in advance for input.

2020 401K Activity:
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Form 5500-EZ page 1:
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Form 5500-EZ page 2:
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Oregon Beancounter
Posts: 27
Joined: Wed May 16, 2018 5:35 pm

Re: Help with 5500-EZ - Have Questions

Post by Oregon Beancounter »

After 40 years in public accounting, I would recommend you hand off any dealing with Form 5500 and all its iterations to a tax professional. I ran into a few “too smart by half” people who thought they could save a few hundred dollars with a DIY. You will sleep easier.
Topic Author
catchinup
Posts: 656
Joined: Sun Dec 31, 2017 5:35 pm

Re: Help with 5500-EZ - Have Questions

Post by catchinup »

Oregon Beancounter wrote: Sun May 16, 2021 10:40 pm After 40 years in public accounting, I would recommend you hand off any dealing with Form 5500 and all its iterations to a tax professional. I ran into a few “too smart by half” people who thought they could save a few hundred dollars with a DIY. You will sleep easier.
I would like to do that but I don't know if I can get professional advice on this. I was told by my former CPA that she did not work on 401k accounting because it is a specialized area.

I think it requires a third party administrator (TPA) But I don't think a TPA is going to help me if they are not the administrator of my plan. I don't want to be in this situation either but this is a situation I'm in right now unfortunately. I have to file this form.

If you can provide contact information of a professional who can help me I would appreciate it.
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Help with 5500-EZ - Have Questions

Post by livesoft »

Oregon Beancounter wrote: Sun May 16, 2021 10:40 pm After 40 years in public accounting, I would recommend you hand off any dealing with Form 5500 and all its iterations to a tax professional. I ran into a few “too smart by half” people who thought they could save a few hundred dollars with a DIY. You will sleep easier.
So I take it that you are not writing about a Form 5500 at all and have not helped anyone with them but you have helped corporations with accounting.
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Topic Author
catchinup
Posts: 656
Joined: Sun Dec 31, 2017 5:35 pm

Re: Help with 5500-EZ - Have Questions

Post by catchinup »

catchinup wrote: Sun May 16, 2021 1:34 pm
In the left hand column of the 2020 activity I posted questions. I have particular concern about the amount to report in box 7A since the Employer contribution includes a $20K contribution for tax year 2019. Even though this $20K contribution was reported on Line 17 of my S-Corp's 2019 1120-S, I'm concerned that the total contribution (employer + employee) exceeds the 2020 max of $63,500. Should I be concerned? Incidentally, my CPA has filed an extension on my 2020 1120-S, so if I file the 2020 5500-EZ in advance of the 2020 1120-S, I don't know how the IRS will be able to verify the 2020 employer contribution amount.
I think I figured out I can file this form on an accrual basis in which case I can include the 2019 employer contribution in the starting balance. As long as I follow the accrual convention for all filings going forward, I think this is allowed.
Oregon Beancounter
Posts: 27
Joined: Wed May 16, 2018 5:35 pm

Re: Help with 5500-EZ - Have Questions

Post by Oregon Beancounter »

I never wrote up a plan…I don’t have a union card for that. But I did prepare Form 5500-EZ until about 2006 or so. It is a specialized area, fraught with complications.

You may wish to go to the instructions and see if a phone number is listed. If I was still in practice, I would call some of my colleagues.
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