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Build Credibility with Expertise Lawrence Groves-July 2005
As an Investment Representative you’ve worked hard to build trust with your pension clients. Now, you can solidify that long term relationship with your expertise on one of greatest fears of small business retirement plan sponsors.
Next to an audit, nothing frightens retirement plan sponsors more than a notification letter from Dept of Labor regarding inadequacies in their responses on Form 5500 or 5500-EZ filing. Inadequacies that, if not corrected within 30 days of date of letter, would subject plan sponsor to substantial fines and penalties, not only from Dept of Labor but from IRS as well.
Following is a listing of most common filing errors that will generate a letter from Dept of Labor.
1. The Form 5500 Must Be Properly Signed And Dated Make sure that you have proper signatures by Employer and Plan Administrator and dates on Form 5500, Form 5500-EZ, and any attached schedules that require a signature (Schedules B: Actuary; P: Trustee; and Schedule SSA; Plan Administrator).
2. The Form 5550 Must Have The Proper EIN And Plan Number (PN) It is critical that Employer Identification Number (EIN) used to identify “plan sponsor” be same year to year when completing line 2b of Form 5500 or Form 5500EZ.
3. The Form 5500 Filing May Not Be For A Period Greater Than 12 Months Be certain time period entered in Part I of Form 5500 is not greater than twelve months. If plan is not reporting on a calendar year basis, then input twelve-month fiscal year period in spaces provided.
4. Use A Proper Business Code When Completing Line 2d Of The Form 5500 On Form 5500, Line 2d, be certain to enter a valid business code that best describes nature of plan sponsor's business. The only business codes that are valid for use in answering Line 2d are listed in Form 5500 filing instructions section marked “Codes for Principal Business Activity”. 5 Use The Correct Plan Characteristics Codes On Line 8 Of The Form 5500. On Form 5500, Line 8, you must check box A to indicate if plan is providing pension benefits. You must enter Plan Characteristics Codes in space provided beneath box A. These codes describe type of pension benefits provided and other features of plan. A list and description of Plan Characteristics Codes is in Section 6 of Instructions for Form 5500.