401K Trust Statement

[Guest Form5500]

Can someone please tell me why an Auditor would dispute this explanation of a negative amount in the Loan Activtiy Report of the 401K Trust Statement? It makes sense to me???? Am I missing something? Help! The Auditor has the Employer questioning this negative amount - the Recordkeeper states it's not actual money - it's just activity...

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Recorkeeper Explanation -

the reason for the negative is because the amount applied exceeded the amount received during this time. This is just an activity section of the trust and does not reflect funds that were already deposited.

P.A. Explanation -

The activity in the loan section does NOT reflect funds that have been deposited. It only reflects activity during the year (activity of funds coming in and out of the Plan). The -$0.000 amount is 2008 activity and was not applied to funds deposited in 2009.

Monies may sit in the Money Market account at various times awaiting direction as to where those loan payments, funds, etc should be posted. There are no “missing” monies from the Plan, either on the Participant side nor the employer side, the loan activity report is just a report of the activity in the Plan.

It should be noted the first half of the 2010 Trust Statement also currently has a negative amount in the loan activity section because money flows in and out of the Plan all year long.

[K2retire]

As I read this explanation, it sounds like you're saying that loan payments are sitting in some unallocated account for a period of time before being applied to the loan. Why isn't the instuction of what to do with those payments made at the same time as the deposit?

[Guest Form5500]

As I read this explanation, it sounds like you're saying that loan payments are sitting in some unallocated account for a period of time before being applied to the loan. Why isn't the instuction of what to do with those payments made at the same time as the deposit?

Payroll is prepared....a check is written - sometimes the check gets there before payroll is manually uploaded to the recordkeeper website so the money has to be deposited until instruction (through payroll upload) is given as to which participants to credit for their loan payments - therefore you see money coming in and out of the loan activity report.