Madoff losses on 5500

[Guest Sus95]

We are modifying the 2007 year end assets to reflect Madoff losses in a DC plan, so that the owner's first RMD due 4/1/09 (based on 12/31/07 acct balance) is not greatly overstated. We are now working on the amended 2007 Form 5500, and item 4f states " Did the plan have a loss, whether or not reimbursed by the plan's fidelity bond, that was caused by fraud or dishonestly?" Not sure how to answer this question.

The instructions to the 5500 state that a willful failure to report is a criminal offense under ERISA section 501. Hence, this question may only relate to plan fiduciary actions, and not outside fraud, which is what this is. However, if we do answer this question with a yes, it probably could result in a plan audit!!

Has anyone dealt with this issue yet??

Thanks.