Do you count receivable Deferrals?

[K-t-F]

March year end.... March quarter investment statement received and all activity accounted for. My question is .. do you take into consideration that an employee may have deferred during the last pay period in the year and the $$ has yet to hit the account? Or do you just go with what you see as of 3/31.

[Archimage]

That depends on whether the plan is on cash basis or accrual basis.

[Guest Greg W]

cash basis daily val plan- you just go with what is there.

traditional accrual basis- you count the receivable

[david rigby]

Maybe. I read the Q a bit differently. If you mean that the payperiod ended on March 29 (for example) but that is not paid until one week later, most likely the date on the paycheck is controlling.

[GBurns]

Shouldn't the amount of an employee's deferrals be taken from the payroll register rather than from the Investment Statement?

[K-t-F]

Yes... The $ that was taken from the paycheck which was part of the 3/04 year will be considered 3/04 deferrals and accounted for as "receivable". It is the way I thought... Thanks for your imput.

[Archimage]

It still depends. If you are talking about a daily plan then no they would not be included. If you are referring to balance forward plan, testing, etc. then yes they would be included.

[K-t-F]

It is not a daily val plan... but then what of the $ taken out of the last payperiod of the year which doesn't hit the account until after the year end? Are you saying that in that situation you would not count the money as the previous years deferral? And that is considered "Standard" practice ?

[TBob]

PATA - In the daily-val world (which is usually on a cash basis) it is standard practice to not include deferrals or any other type of contribution that came in after the end of the period on the statements for that period.

As far as testing is concerned, you do include the deferrals attributable the plan year in testing even if the $$ actually was deposited after the end of the period. Most Daily-val systems have some method of indicating that the deposit is attributable to the prior period.

[E as in ERISA]

For what purpose?

Daily valuation v. balance forward are recordkeeping methods.

But the audited financials would generally still be on the accrual basis regardless of the recordkeeping method.

And the Form 5500 should agree with the audited financials.

[Archimage]

To add to what Katherine has said it depends on what exactly you are wanting to do. If it is for recordkeeping purposes then I think you have your answer. It sounds like you are wanting this for your financial statements for an accrual basis client. If the paycheck the deferrals relate to was received before March 31st then you should count this as a receivable on your financial statements.