Frequently Asked Questions

Setting up an eQRP

Does the QRP have it’s own Fed ID# and Separate bank account?

Yes, the Federal EIN is provided to you when the QRP is set up.

QRP Maintenance

Do I have to file anything with the IRS?

YES, after your QRP is setup you will need to file Form 5500 once a year if your plan assets are over $250,000, otherwise you are exempt from mandatory filing.

Setting up an eQRP

I know that congress is trying to encourage taxpayers to set up retirement plans and has passed laws to allow tax credits for startup expenses up to $500 per year for 3 years. Is this true? And how much can I write off?

Yes. The small business start up credit is 50% of eligible start up and administrative costs, for a maximum credit of $500 per year or $1500 over 3 years, plus you can write off the balance of the the cost of the plan as a business deduction. For example: Plan…Click for more

Setting up an eQRP

I would like to pay for the start up costs for the plan out of an existing IRA. Is this a good idea?

No, this is not a good idea because you cannot take a tax deduction if you pay for the start up costs with your IRA. If you pay using your business account, you will get a tax deduction for the cost of the plan and may even qualify for the…Click for more

Using the eQRP

Who does the bookkeeping for my plan?

The Plan Administrator is responsible for the bookkeeping. This can be done using Quickbooks or other accounting programs for most small plans. Hiring a TPA, Third Party Administrator to serve this purpose is useful as the complexity of the plan increases. Employers often hire outside professionals (sometimes called third-party service…Click for more

Using the eQRP

Do I have to file anything with the IRS when I finally start taking distributions? What is my accountant going to need for this plan?

You will need to file Form 1099R which reports income to the IRS. Your accountant will need Form 5500 annually to report assets, contributions, and number of employees. A one person plan is exempt from filing Form 5500 is the plan assets are less than $250,000.

Using the eQRP

When do I pay taxes on my plan distributions to me personally?

The distributions are treated as income and are claimed on the tax return for that year. If the distributions are received 2016, they are claimed to the IRS along with all other income for 2016 (e.g. April 15th, 2017), and all applicable taxes will be paid at that time. A…Click for more

Using the eQRP

Does the QRP provide asset protection?

Yes, under ERISA (Employee Retirement Income Security Act) laws of 1974, the plan is protected from bankruptcy, creditors, and the IRS.

Using the eQRP

Can I loan family or friends money out of the plan as an investment?

You can loan money to anyone except a disqualified person (see list of disqualified parties), but the loan has to have adequate security. You, as the trustee, must make sure the security is adequate in case of loan default.

Using the eQRP

Can you co-mingle personal assets and bank loans with QRP funds?

NO, never co-mingle personal assets & QRP funds. This will get you into deep water with the IRS and could have your plan disqualified. If you have an investment you’d like to invest with personal funds and QRP funds you can probably do that as long as each piece is…Click for more

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