plan audit

[Lori H]

if a plan has over 120 ELIGIBLE participants but lets say only 50 are actually participating, does this require an accountants opinion?

[WDIK]

The Form 5500 instructions indicate that the requirement for a large plan audit is based on the number of participants shown on line 6. The instructions further indicate that individuals who are eligible to defer are counted as participants.

[Lori H]

WDIK

we have pretty much always used the previous years figure in line 7f on the 5500 and carried that over to line 6 on the current year 5500. this reports total number of eligible participants, not those with account balances. so if i am interpreting this correctly, a plan with lets say 130 eligible participants at the beginning of the plan year would be required to have a plan audit, a participant is defined in the instructions as anyone who is eligible, even if there were only lets say 20 of those eligible actually participating.

[WDIK]

a plan with lets say 130 eligible participants at the beginning of the plan year would be required to have a plan audit...even if there were only lets say 20 of those eligible actually participating.

That is my understanding.

we have pretty much always used the previous years figure in line 7f on the 5500 and carried that over to line 6 on the current year 5500

These two entries are not necessarily the same. For example, if an employee's entry date into the plan is the first day of the plan year, such employee was not reported in line 7 of the prior 5500, but would be reported on line 6 for the current year 5500.

[Guest Boilerburm1]

Lori H -

You are correct. I have seen a plan with only 30 participants with balances require an audit, because there were 130 eligible participants on the first day of the plan year.