First year 401k plan

[Guest scott34]

I am trying to determine if a first year 401k plan requires an audit. The plan has an effective date of 1/1/07 but was not adopted/executed until 7/9/07. I know you would normally determine if a plan needs an audit based on the number of participants at the beginning of the plan year but in the initial year is the beginning of the plan year the effective date or is it the date that the plan really began operating?

[ERISAnut]

Any employees who have met the inital age and service requirements on 1/1/2007 are the number of participants on the first day of the plan year; even though the plan did not become operational until July. That is how I would determine the number.

[JanetM]

And if that number is over 100 you need audit.

[Guest Sieve]

This is a situation in which a short initial plan year might have made sense--i.e., a plan effective date of 7/1/2007--because an audit would not have been required until the 2nd year (the 2008 Form 5500). (DOL Reg. Section 2520.104-50.)