Shedule H 4(i)

[kmciver]

I prepared a 5500 for a self-directed 401(k) large plan invested with an insurance company. On Schedule H item 4(i), I answered "no" to this question. Did the plan have assets held for investment?

I guess I thought because it was self directed, the answer was no, but now I think the answer should have been yes.

What is the correct answer? Has this changed in recent years?

Is this one of those questions that causes the PWBA to send out a letter requesting clarification?

Thanks

[Guest b2kates]

It is my understanding that the question is to differentiate welfare from pensions plans. Normally welfare plans have no assets; however pensions clearly have assets.

The rule which we followed is: are there assets on the balance sheet, regardless of if they are self directed, then the question is answered yes.

[goldtpa]

The instructions for the Schedule H say

Assets held for investment purposes shall include:

Any investment asset held by the plan on the last day of the plan year;

and

Any investment asset purchased during the plan year and sold before the end of the plan year except:

Participations in an insurance company pooled separate account.

Under the instructions I would answer the question NO

[Guest Tinman42]

I administer plans with participant-directed investments in our company's (insurance co) funds. A few years ago we had Janice Wegesin come here and give a seminar on the forms and this was one of the questions we asked. She told us we would mark the "assets held for investment" question as "Yes" and need to attach a schedule of such assets. Auditors of larger plans have verified this is an item they need as well.

[Fredman]

I would agree that in this case 4i should be marked "YES" and would add that if by "self-directed" you mean that participants have "brokerage" accounts that were aggregated for line 1c(15) you should also aggregate those accounts on one line for this as well.

According to the instructions under NOTES for Schedule H, 4i schedules:

(3) Participant-directed brokerage account assets reported in the aggregate on line 1c(15) should be treated as one asset held for investment for purposes of the line 4i schedules, except investments in tangible personal property must continue to be reported as separate assets on the line 4i schedules.