Need advice on retroactive filing of 5500 (401k related)

[Maribel Manibo]

I used a Rollover for Business Startup (ROBS) to start my REI business a few years ago, rolling over 401k funds. I fell behind due to personal/health issues in filing the 5500 (3+ years) but my business also did not make money. How bad is this issue and what will it potentially cost me to get "caught up"? Does this affect the good standing of my company for transacting business or is it just considered back taxes? Would love referrals? I'm not even sure if I need a REI tax attorney, corporate tax attorney, CPA (REI versed) or something I'm not thinking off...

[Linda Weygant]

Quote from @Maribel Manibo:

I used a Rollover for Business Startup (ROBS) to start my REI business a few years ago, rolling over 401k funds. I fell behind due to personal/health issues in filing the 5500 (3+ years) but my business also did not make money. How bad is this issue and what will it potentially cost me to get "caught up"? Does this affect the good standing of my company for transacting business or is it just considered back taxes? Would love referrals? I'm not even sure if I need a REI tax attorney, corporate tax attorney, CPA (REI versed) or something I'm not thinking off...

 Hi Maribel,

The 5500 form series is an informational return - no tax due.  Generally, these types of forms risk very large penalties for non-filing.  In the case of this form, the penalty is $250/day up to a maximum of $150,000.

HOWEVER (don't panic)....

If you've caught the error before the IRS has notified you, you can file under a Delinquent Filer Voluntary Correction Program which involves preparing the delinquent forms, filing them together with some additional notification forms and paying a fee of $500/year to essentially beg forgiveness.

If the IRS has already notified you that you haven't filed, then the procedure is a bit more difficult, but there is still hope.  You will still need to file the returns, then work with the IRS to request any penalties be reduced/forgiven.  In this case, the begging of forgiveness is a bit more involved and the IRS may choose not to do so.

Send me a PM If you want to talk about the process further.

[Maribel Manibo]

OMG @Linda Weygant you are my heroine! IRS has not alerted me (but I've moved 3 times)... how can I check this (hopefully without alerting them). Will definitely ping you.