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Supplemental Schedule of Assets Acquired and Disposed of Within a Year
Filing the Form 5500 is an important requirement to maintain compliance for employee benefit plans, and one of its components is the Supplemental Schedule of Assets Acquired and Disposed of Within a Year (Line 4i).
Supplemental Schedule of Assets Acquired and Disposed of Within a Year (Line 4i) Requirements
When is a Supplemental Schedule of Assets Acquired and Disposed of Within a Year (line 4i) required to be included with an employee benefit plan’s financial statements? How are such transactions identified? Below is a general overview to help navigate this requirement.
- Exception to Reporting – Participant or beneficiary-directed employee benefit plan transactions are generally not required to have this supplemental schedule. Therefore, this exception would apply to most 401(k) and 403(b) plans.
- Assets Required to Be Reported – Investment assets, which were purchased at any time during the plan year and were sold at any time before the last day of the plan year shall be reported, except for the following:
- Any debt obligations of the United States or any United States agency
- Investments under the Investment Company Act of 1940 (e.g. stocks and mutual funds)
- Bank certificates of deposit with a maturity of one year or less
- Rated commercial paper (Pursuant to the SEC Act of 1934), with a maturity of nine months or less. Rating must be valued in the highest rating category by at least two nationally recognized statistical rating services.
- Bank common or collective trusts
- Pooled separate accounts
- Broker-dealer investments (pursuant to the SEC Act of 1934) registered on a national exchange or quoted on NASDAQ
- Other Assets Not Required to Be Reported – The following are not required to be reported if included in other schedules within Form 5500:
- Non-Permitted investments with a party-in-interest
- Loans or fixed income obligations in default
- Leases in default or classified as uncollectible
- Assets reported on the supplemental schedule of reportable transactions
- Information to Be Reported – The following informational columns are required to be reported on the Schedule of Assets (Acquired and Disposed of within Year):
- The identity of issue, borrower, lessor or similar party
- A description of investment including maturity date, rate of interest, collateral, par or maturity value
- Cost of acquisitions
- Proceeds of dispositions
Plan sponsors are well advised to develop processes to collect this information throughout the year or perform a review of any information provided by the plan’s trustee/custodian.
Author: Anastasia Romeo, CPA | [email protected]