CPA Audit

[Guest Kevin1]

In 2008 the 401(k) plan had 131 participants at beginning of year. A large plan filing was made for this year. At the beginning of 2009 there were 120.

Does the exception to the audit apply? The instruction say you may "elect" to filing under the same catagory as as last year implying you could opt not to. If I have a option I would elect to file as a small plan.

[BG5150]

I think yo have to go under 100 to remove the audit requirement.

The 120 was put in there so a minor uptick in population over 100 wouldn't trigger an audit.

[Kevin C]

You have to drop below 100 participants as of the first of the year to file as a small plan. Look at page 7 of the Form 5500 instructions, in the right-hand column. A small plan has less than 100 participants at the beginning of the year. A large plan has 100 or more as of the beginning of the year. The exception is that if you have 80-120 at the beginning of the year, you can file the same way as last year. For 2008 your plan was a large plan filer. It is a large plan filer again for 2009.

[Guest Kevin1]

Thanks. I was tying to read more into the "elect" option.

[Earl]

Sort of related question:

We have a question about a client - trying to determine if they are subject to an audit requirement for the 5500 for 2010 .

12/31/2009 form 5500 Participant count as of the end of the year (line 6): 120

Employees who became Participants on 1/1/2010: 15

Is the Participant count as of the beginning of the 2010 year (line 5 Form 5500) 120 or 135?

Thank you

[Bill Presson]

Sort of related question:

We have a question about a client - trying to determine if they are subject to an audit requirement for the 5500 for 2010 .

12/31/2009 form 5500 Participant count as of the end of the year (line 6): 120

Employees who became Participants on 1/1/2010: 15

Is the Participant count as of the beginning of the 2010 year (line 5 Form 5500) 120 or 135?

Thank you

135