Small Plan Audit Requirement

[bdeancpa]

In reading the definition of Qualifying Plan Assets for purpose of the exemption from the small plan audit requirement, I don't see that contribution receivable is listed as a qualifying asset. Is this correct? Logic would seem to dictate otherwise, but we all know some of these rules aren't driven by logic :confused:

[Guest Emiliano]

When are contributions considered to be "plan assets" according to regulations?

[Archimage]

For purposes of the 5500 you can prepare your financial information on a cash basis. It should be consistent from year to year. Maybe this is the case in your situation.

[mbozek]

How about when they are due, e.g., 8 1/2 months after end of plan year for IRC 412 funding requirements. The failuare to remit a plan contribution by its due date is a prohibited transaction, because it is an extension of credit from the plan to the employer. Therefore the contribution is an asset as of the due date subject to collection by the fiduciary.

[Belgarath]

bdeancpa - you are correct - this would not be a qualifying asset for purposes of the Small Plan Audit Waiver conditions.

[R. Butler]

New calendar year Plan effective 10/01/01. At 12/31/01 the receivable exceeds 5% of plan assets. All assets other than the receivable are qualifuing plan assets. 2 questions:

1. If I prepare on the cash basis, can I exclude the receivable as an asset for the small plan audit requirements?

2. I'm not certain if the bond was purchased prior to 12/31/01. Assuming the answer to #1 is no, is it sufficient that the bond is obtained prior to the due date of the 5500 or must it have been purchased by 12/31/01?

[Belgarath]

You might want to take a look at DOL Reg 29 CFR 2580.412-15, which outlines some procedures for a brand new plan. This should be helpful in your situation.