There will be no reprieve for late filings of Form 5500’s for 403(b) plans.  The Department of Labor (DOL) decided not to grant a unilateral extension for Form 5500 and 5500-SF, which was due July 31, 2010. You can, however, file Form 5558 to get a 2 ½ month extension. The DOL believes that the current processes for obtaining an extension meet the needs of plans that need additional time to file. Retaining the deadline also avoids complex and costly system changes.

The American Benefits Council had requested that the deadline be moved to the later of December 31, 2010 or 9 ½ months after the end of the plan year. They were concerned about stress on companies filing a new form or filing for the first time. In addition, the need to file electronically using EFAST2’s Web filing or an EFAST2 vendor was complicated due to the recent completion of software implementation.

The July 31 deadline applies to a calendar year plan.

The Department of Labor allows an exclusion from the annual audit of assets of the plan which are held by a bank or similar institution or insurance company that is regulated and subject to periodic examination by a state or federal agency. This applies if the institution holding the assets certifies the required information and the plan administrator exercises this option. The exercising of this option allows for a limited scope audit, which is substantially less in scope and costs significantly less than a full scope audit.

Your auditor should show you the courtesy of determining whether the audit is to be full or limited scope before quoting you a price. An auditor can still perform a full scope audit when a certification exists, but the more client friendly approach is to indicate that a limited scope audit can be performed.

However, limited scope audits cannot be used in all situations in which a certification exists. For example, if the certification does not cover certain plan assets, then those assets are subject to full audit procedures. Also, plans that are required to file a Form 11-k should have a full scope audit. The reason for this is that the Securities and Exchange Commission will not accept a limited scope audit report in connection with a Form 11-K filing.

Every year you should review your requirements for operating your 401(k) retirement plans. The IRS has an online checklist to help you keep your plan in compliance with many of the important rules.

You can find it here:  http://bit.ly/bIU7ed

If your benefit plan was audited, then you likely spent hours going through files pulling basic information for your auditors. You may have pulled files from storage or from different offices. Worse, you may have educated your plan auditors on the basics of the plan when they had a plan document and summary plan description to read, which you gave them. You may have even found yourself researching payroll records for various employees for the entire fiscal year to determine why their employee contributions are different than the ones calculated by the auditors. Read the rest of this entry »

If you have 100 or more eligible participants at the beginning of the plan year, then you likely need to have your plan audited by a qualified public accountant. For the purpose of the audit requirement, the participants are not simply defined as anyone who has an account balance. Participants also include persons who have met the age and service requirements for participation. However, there is some leeway offered to small plans via the 80/120 rule.

A plan that covers from 80 to 120 participants at the beginning of the year is in the gray area of the audit requirement. Basically, such a plan may choose not to have an audit if it did not need an audit in the previous year. If the plan has more than 120 participants, then it must be audited in the current year and subsequent years as long as it has above 100 eligible participants.

Doing your job well means a timely filing of the Form 5500 with minimal disruption to your work schedule. These four things will make your audit smoother, easier and possibly more accurate:

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The annual audit of your employee benefit plan is a fact of life. But, you also have other work that requires your attention. Hiring the right auditor and making a few up-front requests can save you time and save your company’s money.