Compliance Check - Asset Values

[Buckoosier]

We recently took over a 401(k) plan that just received a “compliance check” notice from the IRS because the beginning of the year asset value on their 2012 form 5500 was different from the end of year asset value on the 2011 5500. Has the IRS always looked at this issue for 5500s, or is this a new IRS initiative?

[My 2 cents]

One certainly presumes (a) that the people completing the 2012 5500 noticed that their starting balance did not equal the ending balance on the 2011 5500 and (b) they are ready, willing and able to explain the reasons for there being a difference to anyone who asks.

Assuming reasonable competence on the part of the preparer of the 2012 form, the IRS questioning the difference should present no problems.

[Peter Gulia]

Buckoosier: No, this kind of internal-consistency check is not new. Even before electronic filing, it sometimes happened.

In my older experience on this point (I haven't had a client stumble on it in recent years), the Labor department expects to see a change in at least one of the ending and opening values, or to see a financial-statements explanation.

[Buckoosier]

Thank you

[Draper55]

used to see this 10-15 years ago but have not seen it

recently(last 5 years).