Monthly Archives: August 2010

A recent lawsuit in California could affect your 401(k) plan – read the article from Walter Hamilton of the Los Angeles Times here to read the full article.  

Lawsuits over 401(k) fees on the rise

One of the most frequently asked questions we receive is, “Does my pension plan need a financial statement audit?” This question usually comes up when a company’s plan is about to break the 100 employees/participant count and is not sure of the Employee Income Security Act of 1974 (ERISA) requirements.

We at Piercy Bowler Taylor & Kern often advise our clients in this area – and we can share with you ways to determine if a financial statement audit is needed. Understanding some of the basic principles behind the 80-120 Participant Rule will help you answer this question and possibly save on audit costs and administration fees.

Plan Size

Employee benefit plans are broken into two main categories; Small and Large. Generally, a pension plan that covered fewer than 100 participants, including eligible and non-participating employees, as of the beginning of the plan year follows the filing requirements of a Small plan, and a pension plan that covered 100 or more participants as of the beginning of the plan year follows the filing requirements of a Large plan. Generally only Large plans are required by ERISA to submit audited financial statements with their annual Form 5500, Annual Return/Report of Employee Benefit Plan.

80-120 Participant Rule

If the number of participants as of the beginning of the plan year is between 80 and 120 and a Form 5500 was filed for the prior plan year, plan management may elect for the current year to follow the filing requirements of the prior year. For example, if the plan filed the prior year as a Small plan and the current year number of participants as of the beginning of the plan year is less than 120, the plan may continue to file as a small plan and generally avoid the requirement to engage an independent qualified public accountant to audit the plan’s financial statements. There is no limit on the number of years a plan can be considered a Small plan (with less than 120 participants). Once a small plan has more than 120 or more participants, it is automatically considered a Large plan and must engage an independent qualified public accountant to audit the plan’s financial statements.

These rules also apply in the other direction. Some of our clients have had a decrease in participants and now have less than 100 participants. Once a Large plan has less than 100 participants as of the beginning of a plan year, the plan is considered a Small plan and is generally not required to engage an independent qualified public accountant to audit the plan’s financial statements.

If you have questions about whether your pension plan requires a financial statement audit, please contact Kelly Parker at 702-384-1120 and we’ll be happy to help.

Plan sponsors, listen up - the writers at Employee Benefit News have a new article out on how to connect the dots between payroll processing and 401(k) administration. Streamline the employee contribution process? Yes please.  Click here for the full article.

Please meet one of our audit Managers, Cori Lynn Knauss.  Cori is part of our Employee Benefit Audit team, and has been with PBTK since March 2005.   She has a BS in Communications (emphasis in broadcast journalism) and English (emphasis in creative writing) from the University of Miami, though she grew up in Las Vegas.

When you first meet Cori, ask her about the two NCAA national championship necklaces she wears, her English degree, her gourmet cooking, and her love for sports and crosswords.