Can I use "cash basis" on small plan's Form 5500 Sch I

[Guest Moe Howard2]

401(k) safe harbor plan year end is 12/31/03.

The employer's contribution (3% safe harbor + discretionary) were not contributed to plan until January 2004.

The 5500 is on extension and due 10/15/04.

My question:

Can I prepare the Sch I on cash basis (rather than accrual basis) ? ...... In other words I don't want to accrue the employer contributions on the 2003 Sch I since they were not deposited to the plan as of 12/31/03.

[WDIK]

The instructions for Schedule I indicate that you can "use either the cash, modified cash, or accrual basis for recognition of transactions, as long as you use one method consistently."

Why don't you want to file on an accrual basis?

[Lori Friedman]

Every taxpayer, including an individual, is an accrual-basis taxpayer with respect to plan contributions. For practical reasons, most plans, regardless of the sponsor's overall method of accounting, report contributions on an accrual basis. This approach isn't required, but it makes things neater. It's convenient to be able to tie the Form 5500 contribution to the amount reported on Form 1120, Form 1040, etc.

[jquazza]

I think it's convenient too to be able to match the 5500 to the investment sponsors statements (which are on cash basis for the most part.)