Independent Auditor's Report

[thepensionmaven]

Does a frozen profit sharing plan, to which contributions have not been made for several years (and every participant is 100% vested) need an Independent Auditor's Report if there are over 100 participants at the beginning of the year.

Plan appears to be frozen for all participants, so I would think there would be no new participants.

The question appears to be - ADP did the 5500s for 2015 showing 84 participants as of 1/1/15 with 248 as of 12/31/2015, how does this make sense, given the above.

[CuseFan]

Is there a 401k provision, so you have eligibles w/o balances who are considered participants for 5500 count?

[ESOP Guy]

If this plan doesn't want to get an audit for 2016 and not get questioned about it I don't see how you have any choice but decide if the ending count of 248 is correct or not.  Which means do the count over yourself.

If it isn't correct you need to amend the prior 5500.

If it is correct I think you need to ask the more worrisome questions was the 84 correct? 

To be clear being frozen is not a reason to not get an audit. 

[Doghouse]

Having been in this situation myself a few times with clients, if the freeze is more or less permanent, I add language in the amendment to say that no new participants will enter the plan after the effective date of the amendment.

[My 2 cents]

On Friday, May 26, 2017 at 8:24 PM, Doghouse said:

Having been in this situation myself a few times with clients, if the freeze is more or less permanent, I add language in the amendment to say that no new participants will enter the plan after the effective date of the amendment.

That is a good idea in any event, but as ESOP Guy said, being frozen does not excuse a plan over 100 participants from having to get an auditor's report to attach to the 5500.