avoiding audit requirement

[Dennis Povloski]

I was brushing up on audit requirements, so that I could address a CPA's concerns about skyrocketing audit costs for one of his clients, and in the ERISA Outline book, it says that if the employer sponsors two separate plans, that the participant counts are not aggregated in determining whether the plan is a large plan or a small plan for purposes of the 5500 filing requirement.

So if a portion of the plan is spun off, such that the participant counts to both plans are less than 100, then they file as small plans and avoid the audit if they meet the other small plan exemption requirements?

I'm generally a small plan guy, so I just wanted to make sure that I was understanding this right. Did I miss anything?

Thanks!

Dennis

[Bill Presson]

I was brushing up on audit requirements, so that I could address a CPA's concerns about skyrocketing audit costs for one of his clients, and in the ERISA Outline book, it says that if the employer sponsors two separate plans, that the participant counts are not aggregated in determining whether the plan is a large plan or a small plan for purposes of the 5500 filing requirement.

So if a portion of the plan is spun off, such that the participant counts to both plans are less than 100, then they file as small plans and avoid the audit if they meet the other small plan exemption requirements?

I'm generally a small plan guy, so I just wanted to make sure that I was understanding this right. Did I miss anything?

Thanks!

Dennis

You are correct, sir! Depending on the costs of administering two plans, the savings might or might not be the entire cost of the audit.