Form 5500 and Plan Audits

By James M. Moyna

The Form 5500 filing deadline of July 31 is rapidly approaching. For plans of a certain size an audited financial statement is also required to be attached to the 5500 filing.

The safety and security of retirement plan assets is a serious matter. One of the ways to ensure that plan assets are available for participants and beneficiaries is to have the plan audited by an independent certified public accountant. To ensure audits are conducted on a regular basis, the Department of Labor has developed regulations to specify when such an audit is required.

Any plan with more than 100 participants is required to have an annual audit. The regulations, however, are a more detailed and take into consideration whether the plan is a new plan or an ongoing plan.

A newly formed plan with 100 or more participants as of the plan effective date will require an audit. In subsequent years the determination date for the participant count will be the first day of each respective plan year.

An ongoing plan is given some leeway with respect to the audit requirement. An ongoing plan with more than 120 participants will require an audit. For participant counts between 80 and 120, the plan may elect to have an audit but is not required to do so.

Caution, the term "participant" includes those becoming eligible on the first day of the plan year and former employees with an account balance in the plan. The following types of plans are subject to the audit requirement, 401k and 401(a) plans, 403(b) plans, defined benefit plans, money purchase plans, profit sharing plans and ESOP's.

James Moyna has been specializing in audits of qualified benefit plans since 1999. For more information, please visit www.jmoynacpa.com or contact Mr. Moyna at james.moyna@jmoynacpa.com.

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