DoL Issues Audit Exemption For Small Plans

October 19, 2000 ( - The Department of Labor has published a final rule amending the circumstances under which small pension plans are exempt from the requirement to hire an independent accountant, and to include a report from that accountant as part of the Form 5500 filing.

The rule is intended to limit pension plan fraud and provide participants and beneficiaries of pension plans with less than 100 participants with the information they need to monitor plan assets, and hold plan fiduciaries responsible, according to BNA. 

The final rule, which follows a proposed one issued on Dec. 1, 1999, 64 FR 67436, is effective Dec. 18, 2000. The amendments made by the final rule are applicable as of the first plan year beginning 180 days after the final regulation is published in the Federal Register.

Under the rule, the administrator of an employee pension benefit plan does not have to comply with the annual reporting requirements provided:

  • at least 95% of the plan assets are “qualifying plan assets”
  • any person who handles assets of the plan that do not constitute qualifying plan assets is bonded, and
  • the amount of the bond is not less than the value of such assets.

The final rule includes mutual fund shares and insurance company general account contracts as qualifying plan assets. It also includes corresponding changes to the Summary Annual Report and related disclosure provisions to include those investment types.
The final rule is scheduled to be published in the Oct. 19 Federal Register.

– Nevin Adams

The contact person for the final rule is John Keene, Office of Regulations and Interpretations, Pension and Welfare Benefits Administration, Room N-5669, 200 Constitution Avenue, N.W., Washington, D.C. 20210, (202) 219-8521