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receivable loan payments on schedule H


Rai123

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Example: 12/31/2022 payroll is deposited to the plan on 1/3/2023. The deposit includes deferrals, employer contribution, and loan repayments. We enter the deferrals and employer contributions under 1 (b) Receivables lines 1 & 2 on the schedule H and we usually enter the loan payments under (c) "other" receivable. We then lower the overall loan balance under C General Investment (8) Participant Loans by the receivable loan payment. However, I'm not sure if this is correct. Just curious on how everyone else handles receivable loan payments on the schedule H?

Thanks!

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I usually let the auditor make the call on this one, and do it however they prefer. Some of them have strong feelings about it one way or the other.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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The independent auditor will use accrual accounting for their financials.  The Form 5500 can use a cash, modified cash or accrual accounting method.  Any differences in the accounting between the audit report and the Form 5500 should be reconciled.

Here is a short but good explanation of the differences in the methods: https://www.investopedia.com/terms/m/modified-cash-basis.asp

Rai123, if I understand correctly your description of the accounting, you are using the accrual method.  As CBZ notes, your auditor will let you know if they disagree with your numbers.

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Good comments. Also, if you keep the receivable loan payment on there, you would reduce the overall loan balance by the principal portion of the payment, not the total loan payment. Perhaps that is what you meant but not how I read it.

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The problem there is that only some of the weekly interest between 12/28 and 1/4 has actually accrued by 12/31.  Does anyone get that crazy figuring it out or do we just say "close enough" and just use the remaining principal balance as of either payment line of the schedule?  :)

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