DC Plan Audit

[jala]

Has anyone heard of the following:

If a plan begins mid year with greater than 100 participants, is there a transition rule which would allow them to defer the audit to the following year?

Then in the following year, the audit would include both years.

I appreciate any guidance.

Thank You

[GMK]

From this link:

http://www.hhcpa.com/blogs/employee-benefi...d-a-401k-audit/

"... plans who had between 80 and 120 eligible participants at the beginning of the year and who filed as a small plan in the prior year will also qualify for the audit waiver by electing to file as a small plan in the current year."

Note it says eligible participants, not just those who are deferring.

Edit to add this link:

http://www.dol.gov/ebsa/faqs/faq_auditwaiver.html

[Tom Poje]

the instructions for schedule H says the following:

Line 3d(2). top Check this box if the plan has elected to defer attaching the IQPA's opinion for the first of two (2) consecutive plan years, one of which is a short plan year of seven (7) months or fewer. The Form 5500 for the first of the two (2) years must be complete and accurate, with all required attachments, except for the IQPA's report, including an attachment explaining why one of the two (2) plan years is of seven (7) or fewer months duration and stating that the annual report for the immediately following plan year will include a report of an IQPA with respect to the financial statements and accompanying schedules for both of the two (2) plan years. The Form 5500 for the second year must include: (a) financial schedules and statements for both plan years; (b) a report of an IQPA with respect to the financial schedules and statements for each of the two (2) plan years (regardless of the number of participants covered at the beginning of each plan year); and © a statement identifying any material differences between the unaudited financial information submitted with the first Form 5500 and the audited financial information submitted with the second Form 5500. See 29 CFR 2520.104-50.

[ESOP Guy]

GMK

I don't think the 80-120 rule can apply here. The rule has two parts:

1) they have to have between 80-120 at the beginning of the year

2) AND filed as a small plan in the prior year

This plan did not file as a small plan in the prior year. It didn't file at all in the prior year because it didn't exist. So it starts as a large plan.

So Tom's comments are applicable.

[GMK]

Thank you, ESOP Guy. You are certainly correct.

I read too fast and missed this:

plan begins mid year