Receivable question on 5500

[Guest JimP]

In reviewing 5500 returns from takeover clients, preparing this years returns, I've noticed many times where receivables were not listed on the form 5500. As a result, I'm trying to back into what was a receivable from the prior year against the deposits in the current year so I can reflect the receivable still due. I beginning to wonder if I'm missing something here. My understanding is that receivables should be shown. Can someone comment on this! Please!

[Guest Mr. X]

As indicated in the Schedule I instructions, the accounting may be done on a cash, modified cash or accrual basis. So the answer to your question depends on what method was being used.

[Guest JimP]

So does that mean I can choose the method?

[Guest]

It is my understanding that you must remain consistent for reporting purposes. You may go to accrual basis, this would be a change of accounting method.

If this plan requires an audit, the audit should be on the accrual method and you must then reconcile to the 5500

[JohnCheek]

Actually, you can still have an audit on cash-basis financial statements, and DOL will accept them. There is nothing in ERISA that requires that the financial statements be in conformity with Generally Accepted Accounting Principles, which would require accrual basis accounting.

Also, especially in a defined contribution plan, it might not be easy to determine if a contribution should be reported as receivable at year end. There must be a documented commitment (at year end) to make the contribution.