Retirement Plan audits for new plans

[Guest willow]

Situation:

A company is spun off from a larger company in 2004. All employees were terminated and then rehired, hence we had a distributable event.

The new company has over 100 employees and participants.

Does this company need to have a plan audit done for 2004?

I thought I read somewhere that if the plan has been in existence for 7 months

or less, it does not need to have an audit performed.

Thank you!!

[E as in ERISA]

What plan? The new company started a plan?

If there were more than 100 participants at the beginning of the plan year, then an audit would be required. (If participants were immediately eligible).

The 7 month rule doesn't eliminate the audit requirement. It only permits a delay in the timing of the audit (it is performed simultaneous with the next 12 month period). That might make it a little cheaper.