Last Year's Ending Balance Wrong

[KateSmithPA]

We took over a plan this year with a plan year end of 10/31. I was just preparing their 5500 and discovered that the company that prepared the 5500 last year listed an incorrect number for the End of Year Total Plan Assets. The number they listed does not include the outstanding loan balance. I believe that balance should be part of this number.

I want to include the loan balance in the beginning balance for this year's 5500 but then the ending balance from last year would not match the beginning balance for this year.

1.) Am I correct in thinking the loan balance should be included?

2.) What should I do about it if I am right?

Thanks.

[Guest LVanSteeter]

Yes, the outstanding loan balance should be included (which schedule are you using I or H?)

I would include the outstanding loan balance and then submit amended forms for the prior year.

[KateSmithPA]

Thank you for your answer. That's kind of what I thought I would have to do.

One more question. In all the years I have been doing this, I have never had to file an amended return for a 5500. Should I send in both this year's report and last year's amended report at the same time, with a letter of explanation?

[Guest LVanSteeter]

Send them in separate envelopes, no letters.

On the 5500 for the amended:

Form 5500, Part 1, Line B2-Check here

If you file form H, Part 1 Line C(8)-Participant loans (this is where the outstanding loan balance goes)

If you file form I, the outstanding loan balance is included in the total plan assets (Part 1, Line 1(a).

In either case, submit only the 5500 and the accompanying schedules that have changes. Circle the changes in RED (to draw attention to what was amended).

Hope this helps!

[KateSmithPA]

Thanks again. That was a great help!