Small Plan Audit Waiver

[RDY2RTR]

One of the requirements to mark yes to the small plan audit waiver in the Form 5500-SF is that any person who handles assets of the plan that are nonqualifying is bonded in an amount that is at least the value of the nonqualifying plan assets.  Is this amount determined as of the beginning of the plan year or the end of the plan year?  5500 instructions just say bonded in the amount and doesn't clarifying the amount as of a certain date.  In my case, there were no nonqualifying assets as of the beginning of the plan year, but were acquired during the plan year.

Thanks-

[Bird]

I think it is at any time during the year.

[chc93]

I think it is the last day of the preceding plan year...

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2016 Form 5500-SF instructions:

Line 6b. In addition to all of the plan’s assets being eligible
plan assets as defined in line 6a, to be eligible to file the
Form 5500-SF the plan also must be exempt from the
requirement to be audited annually by an independent
qualified public accountant (IQPA).
Welfare plans that cover fewer than 100 participants at
the beginning of the plan year are exempt from the annual
audit requirement.
A pension plan is exempt from the annual audit
requirement if it covered fewer than 100 participants at the
beginning of the plan year or under 29 CFR 2520.103-1(d)
was eligible to and filed as a small plan for plan year 2015
and did not cover more than 120 participants at the
beginning of plan year 2016 and meets the following three
requirements for the audit waiver under 29 CFR 2520.104-
46: (1) as the last day of the preceding plan year, at least
95% of a small pension plan’s assets were “qualifying plan
assets;”

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Is this applicable to the OP question?

[Calavera]

Per instruction page 12: (1) as the last day of the preceding plan year, at least 95% of a small pension plan’s assets were “qualifying plan assets".

Note that 100% of the assets should be "Eligible Plan Assets"

[thepensionmaven]

We just took over a small plan, 12 participants, all assets in a pooled brokerage account, each investment can be readily valued.  I would think the plan would be eligible for the small plan audit waiver.

Prior TPA filed Form 5500 with Scheule  I for 2015.

Any reason why we can not file 50-SF for 2016?

[RatherBeGolfing]

1 hour ago, thepensionmaven said:

We just took over a small plan, 12 participants, all assets in a pooled brokerage account, each investment can be readily valued.  I would think the plan would be eligible for the small plan audit waiver.

Prior TPA filed Form 5500 with Scheule  I for 2015.

Any reason why we can not file 50-SF for 2016?

Old habits die hard.  I know CPA's who do 5500's with a Schedule I just because that is what they have always done. It sounds like you are fine with moving to the SF for 2016.

That being said, just because you are eligible for the small plan audit waiver does not mean you are eligible for the 5500-SF.  

From the 5500-SF instructions (my emphasis underlined)

Quote

In order to be eligible to file the Form 5500-SF, a small pension plan must meet the audit waiver conditions by virtue of having 95% or more of its assets as “qualifying plan assets” in accordance with 29 CFR 2520.104-46(b)(1)(i)(A)(1). If the small plan satisfies the conditions of the audit waiver by virtue of having an enhanced fidelity bond under 29 CFR 2520.104- 46(b)(1)(i)(A)(2), the plan does not satisfy the conditions for filing the Form 5500-SF and must file the Form 5500, along with the appropriate schedules and attachments. Also, although many “qualifying plan assets” for audit waiver purposes will also be “eligible plan assets” as described in the instructions for line 6a, the definitions are not the same. If, as of the last day of the preceding plan year, the plan was 100% invested in “eligible plan assets,” the plan would satisfy the “qualifying plan asset” prong of the audit waiver conditions. Holding all the plan’s investments in “qualifying plan assets,” however, would not necessarily satisfy the conditions for filing the Form 5500-SF. For example, real estate held by a bank as trustee for a plan could be a qualifying plan asset for purposes of the small pension plan audit waiver conditions but it would not be an “eligible plan asset” for purposes of the plan being eligible to file the Form 5500-SF because real estate would not have a readily determinable fair market value as described in 29 CFR 2520.103- 1(c)(2)(ii)(C).