Schedule H, Item 4i-Assets held for investment?

[Guest Judy S]

We have a number of plans in our office with investments at places like ING, Nationwide, Manulife, etc. Unless they have participant loans, all the assets are in pooled separate accounts reported on the schedules A and D, or in the general account reported on the schedule A, or both.

We report the assets in pooled separate accounts in Item 1c(10) on the Sch H, and the general account assets in item 1c(1).

We are having a discussion in the office regarding how to answer Item 4i on the Schedule H. My interpretation of the instructions is that 4i should be answered "Yes", and a schedule of assets should be attached. Others think that the exception noted for assets held in insurance company pooled separate accounts means that these assets need not be reported at all and answer 4i "No", even if assets are also held in the general account.

We received an audit letter from EBSA saying that if something is being reported in Item 1c(10), item 4i must be answered "yes" and a schedule must be attached, which supports my position, but I am interested in how others complete this question. They aren't always right after all.

[WDIK]

I have received similar "computer-generated" notices. At first I would write a letter explaining the exception (which was accepted), but have since found it easier to conform with the system, mark the box and attach the schedule.

[Guest galdridge]

If the plan held investments in a pooled separate account on the last day of the plan year, those assets should be included on the schedule of assets (held at end of year).

The instructions read "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..."

The exception for reporting of pooled separate accounts only applies to the Schedule of Assets (Acquired and Disposed of Within Year).

Glenn Aldridge, CPA

Audit Manager

Bennett Thrasher PC

Atlanta, GA