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    Form 5500 prep fee

    For those of you who have prepared a Form 5500, how much do you generally charge? I've never had to prepare one, but it doesn't look that difficult. I don't want to low ball myself, but I don't want to be outrageous either. If it helps, I consider myself a mid-price professional (1040 w/ Sch. A - $195, 1120S - $850 min., 1065 - $650 min.). Any guidance would be appreciated. Also, if there are some pitfalls to preparing these I'd like to hear those too.

    Thanks!

    #2
    I have never prepared one either but most of my clients need an Enrolled Actuary to sign-off on the form..?? Maybe one is not needed in your case..??

    They usually charge $1,000 and up.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

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      #3
      I Quit

      Josh, I quit filling out 5500s years ago because of the steep penalties associated with it.

      For the most part, they are not really "tax" forms, but since they are IRS forms, various clients think they should be filled out by a tax preparer.

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        #4
        Rate? 1040 w/schedule A=$195.00

        You mentioned $195 for 1040 w/schedule A. This seems high but maybe I should raise my rates.

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          #5
          I guess the charge for a 1040 and sch A depends on your market. Mine average $160 and I am low for my area. The average is about $200, but I have a small practice aimed at covering my expenses and some GOOD beer!

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            #6
            Enrolled Actuary

            When does one need an Enrolled Actuary to sign one of these forms??

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              #7
              Defined Benefit

              Distinction is made between a "defined benefit" plan and a "defined contribution" plan.

              The defined contribution means an employer's pension plan contributes a static or fixed percent to the plan for each covered employee. The performance of funds within the plan are not subject to corporate control or responsibility. A defined contribution plan does not require a statement from an actuary.

              The defined benefit plan means that an employer is obligated to provide a level of future benefits for their workforce after they attain retirement age. The obligation means that there is a liability on the books of the employer. The function of the actuary is to use the ages of the existing workforce, project an estimated performance of the funds within the plan, and in so doing establish a liability using present value. Far more complex than the defined contribution plan.

              In general, I abhor the science involved. A company with a sick bottom line can go into this above-mentioned liability, increase their "expected" performance over the next 30 years from 5 percent to 7 percent, and put pressure on the actuary to sign off on this. The result is [poof!!] instant reduction in the liability and adds millions of dollars onto the bottom line.

              You might wonder how an actuary would sign off on such a thing? First-place the actuary is endowed with caveats which prevent him from being responsible for the performance of the fund. He is responsible only for the mathematics. Secondly, how on earth could the actuary ever hope to predict the general economy or the status of investments in the plan anyway? Not to reflect on the professionalism of actuarial science (they are not to blame), but I have seen this happen, with a notation in the footnotes of audited financial statements.

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                #8
                What kind of penalties Snag?

                Originally posted by Snaggletooth View Post
                Josh, I quit filling out 5500s years ago because of the steep penalties associated with it.

                For the most part, they are not really "tax" forms, but since they are IRS forms, various clients think they should be filled out by a tax preparer.
                Thanks for the dissertation on the difference between defined benefit and defined contribution too. I can tell you that one is employer funded and one is employee funded, but I'm lost after that. I'll definately need to bone up on that stuff for the CPA exam next year.

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                  #9
                  Originally posted by JoshinNC View Post
                  I can tell you that one is employer funded and one is employee funded, but I'm lost after that. I'll definately need to bone up on that stuff for the CPA exam next year.
                  Both types of plans are EMPLOYER FUNDED.............An employee can contribute but basically all is done by the employer.
                  This post is for discussion purposes only and should be verified with other sources before actual use.

                  Many times I post additional info on the post, Click on "message board" for updated content.

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                    #10
                    Huh??

                    Originally posted by BOB W View Post
                    Both types of plans are EMPLOYER FUNDED.............An employee can contribute but basically all is done by the employer.
                    A 401k is a "defined contribution" plan. Yes, the employer contributes, in the form of a match, but the employee is the primary funder in the form of their deferred contributions. I guess it's semantics, but I look at a 401k as ee funded, at least primarily.

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                      #11
                      Originally posted by JoshinNC View Post
                      A 401k is a "defined contribution" plan. Yes, the employer contributes, in the form of a match, but the employee is the primary funder in the form of their deferred contributions. I guess it's semantics, but I look at a 401k as ee funded, at least primarily.
                      Yes and No> A Defined Contribution Plan that this thread is referring to is not a 401K. A Defined Contribution Pension Plan is different and is usually funded 100% by the employer.

                      Edited with additional info:

                      Depending on the motives of the employer and the age of the employees usually establishes what type of Pension Plan is used. A Defined contribution plan is used when the employer has older employees and wants to minumize their contribution in relation to his/hers.

                      A Defined Benefit Plan is used either when the employer has no employees or very young employees. Assuming the employer is age 50 or higher he can contribute 100% of his wages while the younger employees may only get 5% of their wages put into the pension plan. This is 100% funded by the employer.
                      Last edited by BOB W; 12-16-2009, 11:28 AM.
                      This post is for discussion purposes only and should be verified with other sources before actual use.

                      Many times I post additional info on the post, Click on "message board" for updated content.

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                        #12
                        Eu Contrair

                        Originally posted by BOB W View Post
                        Yes and No> A Defined Contribution Plan that this thread is referring to is not a 401K. A Defined Contribution Pension Plan is different and is usually funded 100% by the employer.
                        I started the thread and I am most definately talking about a 401k. My client, the Sole Shareholder of the C-Corp and only participant in the 401k, was informed that he (the company) needs to prepare a Form 5500. Do 401k's not do Form 5500's? Maybe I'm confusing terminology?

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                          #13
                          I don't know, these are usually handled by the 401K administrator and never passed on to the employer to do.

                          If your client has no employees, there is a new (couple of years) 401k "no paper work" plan that is handled just like a "Simple" Plan. Check into it. It has a much higher top end limit, I think $40,000. This type of 401k does not require a 5500 if plan assets are under $100,000. Check the article below for details.

                          ADDED: http://401kpsp.com/unik401k.php
                          Last edited by BOB W; 12-16-2009, 01:27 PM.
                          This post is for discussion purposes only and should be verified with other sources before actual use.

                          Many times I post additional info on the post, Click on "message board" for updated content.

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                            #14
                            Back to the questiom

                            Are you truely talking about a 5500 Form or a 5500EZ?
                            My fee for a 5500 form is usually $40- $50. So based on your fee structure I would say $70-$80 for you. I have never done a 5500 since the EZ form went into effect so no idea how much to charge for that.

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                              #15
                              Not sure Kram

                              Originally posted by Kram BergGold View Post
                              Are you truely talking about a 5500 Form or a 5500EZ?
                              My fee for a 5500 form is usually $40- $50. So based on your fee structure I would say $70-$80 for you. I have never done a 5500 since the EZ form went into effect so no idea how much to charge for that.
                              I'll need to read through the instructions to figure out if it's an EZ or full form. I was thinking of charging $150 (1 hours time). Is that about right as far as the time to fill out the form (I'll have to do it the old fashioned way on a typewriter if irs.gov doesn't have a pdf fillable version).

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