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Schedule 5500 line 4j reportable transactions


Guest Kriso

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In 2002 the trustee of the plan (also employer) substituted one mutual fund for another. This was over 5% of plan assets. This is also a pooled account. All participants in that fund had their plan balance transfer to the new fund. The auditor said that line 4j should be checked "no" as this is a self directed plan. It is only self directed in that the participants choose their split among the mutual funds offer by the plan. It was not the participants choice the change this fund. I was told to change schedule H line 4j to no and delete the Schedule of Reportable Transactions. I have read the 5500 instructions several times but it is not clear to me.

Thanks for any help!

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  • 3 weeks later...

Kriso-

I think you are splitting hairs on this. The sponsor can always select the investment options available to the participants, so you could argue that a plan could never be participant directed. Moving from one family of mutual funds to another does not make the plan any less participant directed. I would have prepared the 5500 without a schedule of reportable (5%) transactions.

John Cheek CPA

www.cpaSPAN.com

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We actually had a similar situation. We did "split hairs" & make it a reportable transaction. I don't disagree with JohnCheek that the Plan still is self-directed, but the instructions provide that "Transactions under an inidvidual account plan that a participant or beneficiary directed with respect to his or her account...." The participant did not direct the change from one mutual fund to another.

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John - thanks for the reply. I didn't think I was splitting hairs though, just trying to understand the rules. There are some (although not many) completely self directed plans - IE the employees can choose whatever they want. It seems to me that the IRA, DOL and ERISA split hairs more often than not. Just wanted to be sure since the employees didn't have a choice.

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Just another note as the reply from r butler just posted. That is the way I was reading it. Does anyone have a ruling on this??

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  • 13 years later...

Bump... I have an auditor asking almost the identical question about a blackout/transfer from one provider to another...  Has the DOL said anything about this?  I had thougth they had clarified publicly somewhere that this would not be a reportable transaction but I cannot find it anywhere... 

Austin Powers, CPA, QPA, ERPA

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