Ineligible Assets - Audit Info

[RestAssured]

Hi All.  I have searched for my answer, to no 'recent' avail.

I have a small business owner (himself, his wife, and 3 employees) in a 401(k) plan who would like to invest his balance in a Limited Partnership (which holds real estate).  This group is already in segregated accounts, but the owner's investing of almost 100% of his own balance is still way more than 5% of plan assets.

The plan would still need an independent audit, correct??  Obvious answer, I think.

Besides this question, can someone please point me into some reliable source for learning more about question #6 a & b on the 5500SF - ineligible plan assets and the subsequent plan audit requirements?

I greatly appreciate it.

[RestAssured]

I'm moving this over to the "Plan Investments" forum....

[Paul I]

The easiest place to start is the instructions for Schedule I in the instructions for the 2022 Form 5500 page 49 Line 4k.  The instructions include examples which use a limited partnership to illustrate how the rules apply.  The example also discuss how you may qualify for the audit waiver if the plan has an adequate amount of fidelity bond coverage.

2022-instructions.pdf