Audit For New Plan

[austin3515]

Can you confirm that for a new plan, there is no requirement to look to participant counts on the last day of the plan year as opposed to the first (i.e., similar to top-heavy).

I am pretty sure there is not but want to make sure I am in good company...

[Lou S.]

I am not aware of any exception for 1st year plans and I was unable to find any special rule in the instructions to Form 5500.

[ESOP Guy]

If you are friends with an auditor you might want to ask them about this. While I don't think there is a rule there might be a practical limitation.

Something in the back of my mind says that a year from now when they do the audit they have to audit both years to give an unqualified opinion. Otherwise you have a mix of audited and unaudited FS. I think that is a problem.

My memory could be wrong but a quick call to a friendly CPA might clear that issue up.

[PensionPro]

Even in the initial year participant count is based on the first day of the plan year. A plan administrator is not required to include the report of an independent qualified public accountant in the annual report for the first of two consecutive plan years, one of which is a short plan year provided certain conditions are satisfied including the condition that the audit attached for the subsequent plan year covers both plan years. See DOL Reg. 2520.104-50.