JohnCheek

Yes, in both cases, with one exception: No 5500 would be required for a disability plan if it is established only to comply with state laws requiring disability insurance (5500 instructions pg 3)

Actually, to be exempt from filing a 5500, the SEP must conform to the alternate method of reporting described in the regs., which is to give a copy of the adoption agreement to every participant. Real simple, but if you discover 5 years too late that you didn't do it...

No.

line c- other income-- seems right. For the schedule of assets held for investments, participant directed brokerage accounts can be one-lined, except that those specific assets mentioned previously need to be detailed. For the schedule of 5% transactions, all participant directed transactions can be excluded, including PD brokerage accounts.

As I said, the instructions are fuzzy when it comes to the gain or loss component, so your treatment could be supported. I think I would have broken out the partnership interest, however.

The instructions get a little fuzzy here. They say to report total aggregate investment income on one line (excluding expenses). To me, that means dividends, interest, realized and unrealized gains/losses. By the way, you need to separate loans, partnerships, joint ventures, real property, employer securities, and "investments that can result in a loss in excess of the account balance of the participant."

Sorry, MB, my first response was a bit off base. See the instructions on page 39 of the 5500 booklet: for the 2001 plan year, you have a choice in reporting assets of Participant Directed Brokerage Accounts. You can report the underlying assets on each line that applies, and report the income on the lines that relate to the underlying assets, OR, you can "one-line" the assets on 1©(15) Other, and one-line the income on 2c "Other". You need to read the instructions, because certain underlying inveestments (loans, partnerships, etc) are not eligible for the one-line treatment. You mentioned "outside brokerage accounts", and I am assuming you mean participant directed brokerage accounts as deescribed under feature code 2R

The multiemployer plan will have to be administered by a joint board of trustees, in which labor and management have an equal voice. The Plan will need a trust agreement, a plan document, and presumably one or more collective bargaining agreements that require contributions to the plan. For a db pension plan, or a welfare plan that is not fully insured, you need an actuary's help. And, yes, you definitely need an attorney. For any employer to participate in the plan, they would either be a party to the collective bargaining agreement, or they would have to sign a separate participation agreement, but the individual employers do not need to be a party to the trust agreement or the plan adoption agreement.

MB, you are over-analyzing it. The instructions you mention refer to lines 2(B)(6), (7), (8), (9) and (10), which are CCTs. PSAs and master trusts, 103-12s, and mutual funds. In those cases, all gain, loss, interest, and expenses are reported on a single line, and the net gain is computed as a "plug" number-- the difference between beginning balance plus additions minus expenses, vs. the ending fair value. Now, lines 2(B)(4) A-C apply to all the other investments, and DOL wants you to calculate the realized gain or loss on sales by pretending that the carrying value of all assets was re-set to fair value at each year end. So the realized gain on an asset sold Jan 31, 02, is the dales proceeds minus fair value on Dec 31, 01. I have not seen anything that indicates participant directed brokerage accounts should be handled any differently.

jaemmons said: "Given the fact the plan's assets were at one point during the plan year, held by an institution which did not meet the requirements of 29 CFR 2520.103-8(B), you cannot perform a limited scope audit." I agree that you can not limit the audit with respect to THOSE assets; you must test the balances and transactions just as you would in a full scope audit. However, you can limit your procedures with respect to the assets held by the qualified custodian. Nothing in the DOL regs suggest that 100% of the assets have to be covered by the certification.

The DOL limited scope exception ALLOWS you to skip testing the investment data certified by the custodian, but you still have to test everything else. If there is a second custodian who does not ( or can not) give you a certification that DOL accepts, you obviously have to test the investment data for activity and balances at the second custodian. So, you do a full scope audit on the second custodian, and a limited scope audit on the first custodian. Now, since you have to give one opinion on the whole year, it has to be a limited scope opinion, which says , basically, that the scope of your audit was limited, so you can not express an opinion. The normal limited scope opinion refers to a footnote that summarizes the data certified by the custodian. You might expand that footnote to explain that such data represents only half the year.

Why does IRC 318 have anything to do with unincorporated entities? 318 talks only about "stock". The IRS has accepted medical plans that cover a spouse and dependents of a self-employed individual, if the spouse is really an employee of the entity. It would seem to me that the cost of a medical plan that covers a child who is a valid employee should also be deductible. (See http://www.ebia.com/weekly/articles/2001/C...3IRSIssues.html )

I'm a CPA, not a TPA, but my usual method of generating the Schedule of 5% transactions is to look through the activity for the entire year. It is not often that I get a schedule prepared by a bank, and even then, I find I neeed to make sure it is complete.

2much: The 2001 instructions on page 7 says "between 80 and 120" , but goes on to give an example, "if the number on line 6 is 100 to 120." The instructions to Schedule H say "fewer than 120." The AICPA audit guide says "between 80 and 120 (inclusive)." Seems any amount up to and including 120 would qualify.

If this loan is in default, it either has been reported as a deemed distribution, or it is within the grace period, but will be reported as a deemed distribution shortly. (The participant has received, or is about to receive, a Form 1099 for the defaulted loan.) That's reported on Schedule H line 2g, and those loans that are "deemed distributed" are no longer included in plan assets on your ending balance sheet. Therefore, those loans are not included in the Schedule G list of loans in default

If the plan is a money purchase plan, Sched R is required, and being collectively bargained does not change that. IF all of the participants are subject to the CBA, it makes Schedule T a bit easier, though.

I also had conversations with the Office of the Chief Acct; my understanding is that the DOL does not want accountants auditing their own work. I would be very surprised if a CPA firm providing TPA services was considered independant for DOL purposes. And the idea of providing brokerage services to an audit client makes me really uncomfortable... I suspect that those CPA firms that want to provide brokerage and TPA services might have to give up plan audits.

I would report in 2001 if the 5500 is on the accrual basis, and in 2002 if the 5500 is on the cash basis.

Sounds like you are describing a clerical function, similar to writing a check to pay contributions. That should not involve fiduciary liability. You might argue that the decision to set up the ACH system might be fiduciary, but I think that's too much of a stretch.

I have seen many DC plans that allocated administrative costs as a flat annual change per account. (Most of those were multiemployer plans.)

An unallocated insurance contract is an investment of the plan, but an allocated contract is owned by the participant. In an allocated contract , the payment of the premium is a benefit expense. Your transfer from unallocated to allocated is, in effect, a liquidation of a plan investment to pay a benefit.

First, I would not consider an insurance poilcy a "security" for this purpose. Second, if you have individual policies, there's a good chance the plan is buying "allocated" policies, which means that the policy is actually owned by the participant; in that case the policy is no longer an asset of the plan.

Is the plan fully insured? Who is funding the plan? How many participants at beginning of year? Are premiums withheld from participants pay, and if so, how fast are they remitted to insurer? Is there a cafeteria plan involved? When your say "group sponsored", are you describing something that does not involve employees and employers, such a a plan offered by the chamber of commerce?

Yikes!! Your question is too broad, and, it is possible, suggests a situation that makes my hair stand up! Please give more details: what kind of benefits are offered to the members, who pays for them, are they insured, etc.

I don't think DOL will care if you report the name change on the 2001 or the 2002 report and SAR. DOL primarily uses the EIN and plan number to identify the plan. However, reporting the change on the 2002 5500 and SAR is probably more technically correct.