Annual Administration
We understand that filing taxes can be the last thing anybody wants to do. However, it is important to remain compliant with the IRS. We have provided the resources below to help save you time and make this process easier for you.
What Does ERSOP® Need From Me
In Order To Do My Administration?
Every year, when it has come time to do your administration, ERSOP® will send emails requesting the information from you that is listed below. You may select each item to expand for more details. Please refer to this list as often as you need to.
*Please note that not every item may be applicable to you.
- Profile Update
- Employee Census
- W-2 Employee Wage & Tax Statement
- Informal (or Formal) Business Valuation
- Plan & Trust Bank Account Statements
- Broker Account Information (Only If Applicable)
- Distribution Paperwork (If Applicable)
- Annual Administration Fee Payment
This form is simply to note any changes that have occurred with either address, emails, phone numbers, accountants, trustees etc. If you are unsure regarding certain fields, just leave them blank and fill in what you are able. You may download this form located on to the right of the page.
PLEASE NOTE: Even if no changes have been made since the previous year, we will still need you to submit this form stating so.
The employee census form is very important for us to be able to complete the administration. We cannot proceed with the annual administration until we have the completed census form.
All employees of the Corporation are to be reported regardless of eligibility. Please make sure to contact our office if you have any other businesses that are employing individuals. This is necessary so that we can make a determinitation as to whether or not those employees should be included on the census.
Any officers and/or trustees need to be included on the census, regardless of whether salary was taken or not.
The information MUST be reported using our form template which can be found to the right of the page.
Provide a copy of the W-2 Employee Wage & Tax Statement for each employee who received W-2 wages in your plan year.
First, let us answer some questions regarding valuations:
What is a valuation?
A valuation is the fair market value determined of your company at the end of the tax year. There are two general types of valuations- informal and formal.
An informal valuation is an estimate made by either your accountant or a director/trustee of the Plan. An informal valuation may also be referred to a Broker’s Opinion of Value (BOV) or a Broker’s Price Opinion (BPO).
A formal valuation is a professional valuation of Fair Market Value (FMV) performed by a certified business appraiser. If the individual is not a certified business appraiser, then your valaution is not a formal valuation.
While it is beneficial to have a formal valuation performed every year, and something we highly recommend, it is not necessary unless you have either: purchased or are planning to purchase additional stock, bought any shares back, or are looking to sell your business. The advantages to getting a formal valuation every year is that it first allows you to stay on top of your plan’s stock value and managing your stock plan accordingly. The other advantage to having annual formal valuations is using the value as a performance metric in your business and validating or adjusting your business plans to achieve your goals. In any event, if you plan to buy or sell stock or plan to sell your business, please have a discussion with your Plan Coordinator first.
There is no one way to really determine how much a business is worth.
Basically, what do you believe the value of your business is worth at the end of your tax year?
Every year we will need copies of the monthly statements of your Profit Sharing Plan & Trust bank account (if it is opened), inlcuding brokerage statements, from the beginning of your plan year end to the end of your plan year end.
If you have multiple participants with accounts, we will need each participant’s account statements for the full tax year as well. Please provide detailed explanations for any deposits/withdraws that occured to/from the brokerage/plan account so that we can report these accurately.
*Failure to provide an explanation may result in delay in filing or the inability to complete the adminsitration or create inaccurate reporting to be filed. Such corrections may require amendments which would also add more time to your filing and resulting in a late submission. You would be responsible for the late fees incurred due to submitting inaccurate data or incomplete data. Depending on the severity and level of work required, this may exceed the standards we set for the Annual Administration program and you may be subject to additional service fees.
If you have closed your PSP&T bank account, it is necessary for us to obtain the statements up until the account was closed. Once it has been reported that the account was closed, then this item is no longer applicable to you unless you decide to reopen the account. You must inform your Plan Coordinator if you have decided you want to reopen your PSP&T bank account.
We only need copies of your Corporate statements IF additional stock was purchased, stock bought back, or a contribution was made and we need to see the money going into or coming out of the account. Other than the applicable statement, it is unnecessary to send us your Corporate bank statements.
Please be aware that if a participant with an account balance terminates or takes distribution, it is important to inform us immediately by emailing your Plan Coordinator with the following data:
• The participant name, hours worked, and if applicable, the termination date and termination wages (if any).
• Copies of the filed Form 1099R(s) and signed Form 1096.
• Copy of the relevant participant distribution form(s), filled out (found in your blue Profit Sharing Plan binder).
If you have not filed the Form 1099R(s) & 1096, SD Cooper can produce them for free if you are enrolled in our Annual Administration program; otherwise, we can prepare them for a fee of $250 for the initial filing of the forms and $100 for subsequent filings. If you hire SD Cooper to produce the forms, please send the data to us as soon as available or no later than December 1st of the distribution year.
The IRS filing deadlines for the Form 1099R & 1096 are as follows:
1) Copy C for Recipient (participant) is due January 31st (of year after distribution year);
2) Copy A for IRS is due January 31st (of year after distribution year).
In order to complete your administration, you will need to be enrolled in our Annual Administration program and current on your monthly payments.
If you are not enrolled in our Annual Administration program, then the standard annual filing fee is $2,500.
If you are enrolled in our Annual Administration program but your monthly payments are not current, you must either pay the balance due before we process your Form 5500 or pay the difference between what you have already paid and the standard annual filing fee of $2,500 if you miss the SD Cooper document deadline.
Please Note: Delay in payment may result in a delay in Form 5500 submission which is your responsibility and may incur late fees from the IRS and/or the DOL. We have established our deadlines in order to assure our clients their filings will be completed in a timely manner.
Please Also Note: Only sending in payment before the deadline without the other data will still be considered late and may incur late fees from the IRS and/or the DOL.
Annual Administration Forms
These forms are for existing clients. Please download and fill out the Employee Census, Informal Valuation, and Profile Update forms.
We are no longer offering an upload feature on our website. However, we will be featuring a client portal accessible through our website, coming soon.
For the time being, please send completed forms to us either by email: [email protected], or mail into our office. You may also fax individual forms, however, please DO NOT FAX bank statements.
Administration Questions
I Would Like to Begin Making Contributions. What Steps Should I Take?
There are a few factors to consider when you begin making contributions. Please refer to our Client Resource page ‘Contributions & Distributions‘ for more in-depth explanation. You can also call Cooper, our AI receptionist, at 866-MY-ERSOP who can help with basic information and assist in connecting you with your Plan Coordinator.
What Should I Do If I Want To Begin Buying Shares Back?
If you are in a place where you can start putting money back, great! Please reach out to us for a full list of steps you will want to follow in order to complete this. Please do not buy back the shares before speaking with us, as there are a few things necessary to be done before doing this.
I've Sold My Business. What Do I Do Now?
If you’ve sold your business, our Plan Coordinators will need specific things in order to proceed with the annual tax filing. Please contact us so that we can provide you a checklist of needed data. Cooper can help point you in the right direction by caller her at 866-MY-ERSOP.
What is My Tax Year-End?
Your tax year-end is the 12-month period for which you file your taxes. You either have a traditional calendar year (Jan-Dec) or you have an adjusted financial calendar year (for example: Sep-Oct). If you are unsure what your tax year-end may be, ask your CPA or contact your Plan Coordinator and we’ll be happy to let you know. 866-MY-ERSOP.
When Is My Deadline?
There are two different deadlines to consider: ERSOP’s deadline for data submission and the IRS’s deadline for filing the tax return.
The IRS’s deadline of the return is 7 months, plus an optional 2 and 1/2 month extension, after the Plan / Corporation year end. For example, a December 31st year end due date is the last day of the next following July which may be extended to the 15th day of the next following October. (Did you get all that?)
What if I Have Taken or Am Looking to Take A Loan?
There are specific factors to consider when it comes to loans. It also depends on what kind of loan you are looking to take or have taken. Your Plan document has specifics on loans that need to be referred to. Please contact your Plan Coordinator if you are thinking of taking a loan. 866-MY-ERSOP.
What If I Have Someone Else I Want to Do My Administration?
It is very important to let your Plan Coordinator know that you will be having someone else perform your administration for the Plan. Please remember that the 5500 form for the Profit Sharing Plan & Trust that is to be filed is very specific to the Plan. While we highly advise letting us handle this for you, we at least appreciate being informed if you have planned to have this service performed elsewhere so that we can make note of this in your file.
Important Note: If The SD Cooper Company is not preparing and filing your annual Form 5500 submission and you have someone else doing it, you assume responsibility for the accuracy of your filing. The SD Cooper Company is not responsible nor accountable for the work and filings of others.
Should you decide to have The SD Cooper Company perform your administration at a later time, after it has been filed elsewhere, it is likely that additional fees will be imposed for needing to review (and possibly amend) any and all of the work that has been done up until that point.
What is the Penalty for Filing Late?
If you are enrolled in our Annual Administration program, there is no charge from The SD Cooper Company for a late fee.
If you are not enrolled in our Annual Administration program and seeking our help to file late reports, we charge a nominal fee of $250 for each late year requiring an annual report.
However, the IRS and DOL have their own late filing fee of $750 per late filing with a maximum late filing fee at any one time of $1,500. For example, if you are late filing for 2023 and you make a late submission, the fee is $750. If you are again late in 2024 and make another late submission, the fee is again $750. If you are two year behind and late for 2023 and 2024, and you file both reports late and at the same time, then the maximum fee you pay is $1,500. Let’s say you are late for 2023, 2024, and 2025 (3 years late, but not having received a penalty letter from the DOL), then you maximum late fee is still only $1,500. Keep in mind, you don’t want to be late for any reason if it can be avoided.
If you receive a penalty letter from either the IRS or the DOL, the penalty for filing late could be $250 a day for every day you have not filed to a maximum of $150,000 each year. Again, you want to be on top of your filing dates and have a plan to provide your paperwork on time.
When Do I Need A Formal Valuation Performed?
Please refer to the information to the left of the page and select the tab labeled ‘Informal (or Formal) Business Valuation’.