Auditor asking for Cost Basis in 401k plan...

[heygents]

Has anyone with a large plan ever had an auditor ask for the cost basis of all the mutual funds? We are going through this with a new auditor this year and have never been asked this before. Does this make sense to anyone?

[Lou S.]

Why on earth would they need that info in a qualified plan?

[MoJo]

I've seen them ask for it. I told them no - they don't need it - and if they persist, I tell the managing partner I no longer want to train their younguns - there are other auditing firms out there.....

[Guest JPIngold]

On my Schedule of Assets maintained by the plan, I always put the following memo at the bottom with respect to column (d) - Cost:

Memo - Cost information has been omitted since all investments reflected on this schedule are maintained in an individual account plan in which all assets allocated to participants' accounts are self-directed for investment purposes.

I give that schedule to the auditors with a copy of the 5500 draft and they never ask me the "cost" question.

[ESOP Guy]

Guys the auditor needs the cost information for the Sch H Part IV Line 4i attachment.

Although you would think the investment house/platform that holds the investment would have that data handy.

Although if you read the Sch H instructions you will participant directed accounts don't have to report cost.

It is that most ESOPs that have mutual funds are trustee directed so I see the cost information all the time. Most 401(k)s being participant directed would not see cost on the attachment.

So back to the original question are the mutual funds trustee directed? If so, they need cost. If not show them the instructions to the Sch H Part IV line 4i attachment.