No 2020 Form 5500 if Form 5558 Submitted for Retroactively Adopted Plans

There is no 2020 Form 5500 filing requirement for plan sponsors that already submitted a Form 5558 for plans retroactively adopted after the end of the plan year. The IRS issued a reminder of the relief on Sept. 22. 

The IRS also restated the clarification that plans retroactively adopted after the end of the plan year have no 2020 Form 5500 series return filing requirement. Further, delinquency notices will not be generated based on filing of a Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. 

The IRS had made the announcement concerning no 2020 Form 5500 filing requirement for plans retroactively adopted after the end of the plan year in its August 6 Employee Plans newsletter. This relief is based on Section 201 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), which permits an employer to adopt a retirement plan after the close of the employer’s taxable year (by the due date, including extensions, for filing its tax return for the taxable year) and elect to treat the plan as having been adopted as of the last day of the taxable year. This provision of the SECURE Act applies to plans adopted for taxable years beginning after Dec.31, 2019.

The IRS said in that announcement that if an employer adopts a plan during the employer’s 2021 taxable year (but not later than the due date, including extensions, for filing the employer’s 2020 tax return) and elects to treat the plan as having been adopted as of the last day of the employer’s 2020 taxable year, then the plan sponsor will not have to file a Form 5500 concerning the plan for the plan year that begins during the employer’s 2020 taxable year.

Instead, the first Form 5500 required to be filed will be the 2021 Form 5500. However, the IRS adds, the plan sponsor will be required to check a box on the 2021 Form 5500 indicating that the employer elects to treat the plan as retroactively adopted as of the last day of its 2020 taxable year.

In addition, if the plan is a defined benefit plan, the employer must attach a 2020 Schedule SB to the 2021 Form 5500 or Form 5500-SF, in addition to a 2021 Schedule SB.