Small plan audit exception

[Guest Diane DuFresne]

I am working on a Form 5500 for a plan that has less than 95% qualifying assets but all of the qualified assets are limited plan assets. The rules imply that the audit wavier applies to the plan provided the employer purchases a bond covering the nonqualifed assets and the SAR provides additional disclosures.

What is the time frame for the purchase of the additional bond? We are just working through the calculation so the employer has not purchased anything as of yet (worse yet, they do not even have the general ERISA bond!)

Your thoughts would be appreciated.

Thanks,

Diane

[Theresa Lynn]

I thought the measurement date for determining the percentage of qualifying assets was the last day of the previous plan year. If that is the case, seems like you would need to arrange for bonding very early in the "problem" plan year, immediately after the valuation is completed.