Schedule H on a Cash Basis

[12AX7]

I have plan that I took over in 2010. The Schedule H was prepared on a cash basis. I typically prepare these schedules on an accrued basis to coincide with the IQPA schedules.

I don't see anything in the instructions that would would prevent me from continuining to use this method, even thought it's not my preferred way of doing things.

Can the form be switched from Cash to Accrued, of am I stuck on cash for eterniity with this plan?

[chc93]

I've heard from auditors in the past that you can do it either way... just be consistent year-to-year. And, you could probably switch now, but then again, stay consistent after the switch (also assuming it was consistent before you switch).

[12AX7]

How does one switch without changing the opening numbers on the Schedule H, or can you change the opening numbers?

[chc93]

What I've seen and done... the beginning of year amounts are brought forward from the prior year. Then, the contributions reflect the cash basis contribution from the prior year, and the current year receivables... essentially doubling-up contributions for this year of switch. I don't think you can change the beginning of year amounts... I think they must be equal to end of year amounts from the prior year.

[JanetM]

You can't change the beginning amounts. You will have to adjust the amounts based on the accurals. It is easier to switch from cash to accrual then back.