plan termination, 12/31, and audit -

[Guest DonJones]

Here is a timeline:

-Plan with 500 participants terminates in March 2007

-all of the participant balances will be distributed.

-This is a slow process such that by May 2008, the Plan still holds participant balances

what is the 5500 and financial statement/ audit requirement here? I would think you need March 2007 dated audited financial statements on the liquidation basis of accounting such that ending net assets are $0, and a large liability is recognized for all remaining payments. But the final 5500 would not be created if the plan still had assets, therefore there will be a standard 12/31/07 5500 and no final 5500 available.

Do you wait for the final 5500 and ignore the 12/31/07 5500, then file the 3/07 financials with that? Or do you still have to file the 12/31/07 5500?

Since financials and the audit are for accrual basis, I have to think the financials are dated as of the official plan termination date (3/07). But then you have a 12/31/07 5500 and later, a final 5500...

[Bill Presson]

Here is a timeline:

-Plan with 500 participants terminates in March 2007

-all of the participant balances will be distributed.

-This is a slow process such that by May 2008, the Plan still holds participant balances

what is the 5500 and financial statement/ audit requirement here? I would think you need March 2007 dated audited financial statements on the liquidation basis of accounting such that ending net assets are $0, and a large liability is recognized for all remaining payments. But the final 5500 would not be created if the plan still had assets, therefore there will be a standard 12/31/07 5500 and no final 5500 available.

Do you wait for the final 5500 and ignore the 12/31/07 5500, then file the 3/07 financials with that? Or do you still have to file the 12/31/07 5500?

Since financials and the audit are for accrual basis, I have to think the financials are dated as of the official plan termination date (3/07). But then you have a 12/31/07 5500 and later, a final 5500...

You file a 12/31/07 5500 just as you normally would. There are questions about the termination and you'll need to answer those. Then, if all the assets are distributed before 12/31/08, you can file a final 5500. Your audit requirement will depend on the number of participants at 01/01/08.

[Guest DonJones]

Thanks. Would the financials and audit be dated 12/31/07 even with the prior termination date or would they be march 2007? If they were march 2007, they would show $0 ending assets and a huge liability....so if the final 5500 in 2008 had financials and an audit, wouldnt it be $0 beginning balance and $0 ending balance, since all distributions were accrued for in the March 2007 financials?

[WDIK]

since all distributions were accrued for in the March 2007 financials?

Even assuming I was comfortable "accruing" the distributions (which I am not), the plan would still have assets, albeit with an offsetting liability. Follow the advice of Bill Presson.

[Guest Dell]

I'm not sure where you are getting the idea that the financial statements would show a liability for the benefits because of a termination decision. Recording a liability for benefit distributions would be a departure from GAAP. If the plan year end is December 31, and the plan still holds assets on that date, that is the date of the financials - not the date that the termination was decided upon. If all the assets aren't paid out yet, you continue filing 5500's until the assets are paid out. Audits may or may not be required depending on participant counts.