5500 Filed, Yes, But Did You Read It?
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Nov 3, 2009
We’ve passed the extended filing deadline for 2008 Form 5500’s by a couple of weeks now. So you can check that task off of your list until next year. But I want to ask you a serious question …
Did you read it?!?
I mean did you really read it before filed it? Or were you cutting the filing deadline so close that when you got the final package in your hand you just put it in the mail to get it out the door? (Been there, done that ...)
This may seem like a ridiculous question to you, but be honest.
• Did you review all of the figures and entries on your Form 5500?
• Do you know where each came from and what they mean?
• Do you agree with them?
• Did you read your final audit report cover-to-cover?
• Do you understand each of the footnotes and what they mean?
• Are all of the footnotes accurate and applicable to your plan?
• Did it include the new footnote required under FAS 157?
If you can’t answer “YES” to all of these questions, then you are not upholding your fiduciary responsibility for your plan. Period.
It’s easy to say “That’s why I hired the accounting firm to audit the plan and I trust them.” But remember, delegating a task for your plan DOES NOT delegate the responsibility for it. Fiduciary responsibility cannot be delegated under ERISA.
True Story:
I have a client who was audited by the DOL this summer. Their plan operations and filings were reviewed for the last FIVE YEARS (2003-2007). Why were they audited? Bottom Line: Because their audit reports were improperly presented and the auditor just plain messed it up. More importantly, if the Plan Sponsor had thoroughly reviewed them before filing, they would have caught the errors and corrected them before filing … preventing the more than $15,000 in cost to prepare for and defend the DOL audit.
Outcome: They were able to correct the filings and came away with a fine from the DOL of less than $1,000 … (but not before they spent $15k for the audit.)
Action Steps:
• Go back right now and review your 2008 filing. Make sure you can answer yes to all of the questions above. If corrections are needed, make them and do an amended filing NOW (before the DOL or IRS catch it.)
• Request our free report on preparing for your annual audit. Start planning now for how to make the process better for next year.
P.S.: I believe the DOL/IRS will be looking closely at participant counts on 2008 Form 5500 filings. If you had a significant drop in employee counts or participant counts in 2008, your plan may be targeted for audit to determine if a partial plan termination occurred. (See previous blog on partial plan terminations here.) Make sure you’ve handled employee reductions correctly with respect to your plan.
Let me know if I can help … it’s what I do!