The Internal Revenue Service (IRS) doesn’t read the 5500s, but the Department of Labor (DOL) does.
The problem with asset purchases and existing plans is there will be a change in the plan sponsor and the employer identification number (EIN). The plan sponsor should note this on Form 5500. Yet, so often even if they do, the IRS will send a letter asking for the latest 5500 using the old plan name, employer, and EIN. They will say they don’t have a copy and want one. If you don’t answer the IRS, you might get a penalty for a 5500 you already filed. That’s why I’m convinced that the IRS doesn’t read the filed 5500 forms. From experience, DOL picks up much more information from these Forms as one avenue to audit the plans.
Yet it’s annoying to have to help plan sponsors answer the IRS when they already did on Form 5500.
