Supplemental Schedule of Assets Acquired and Disposed of Within a Year
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 determined? Here is a general summary of how to deal with these issues:
- 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 United States debt obligations
- Any debt obligations of a 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
- Bank common or collective trusts
- Pooled separate accounts
- Broker-dealer investments registered on a national exchange
- Assets Not Required to Be Reported
- 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
Each of these above four categories of assets are reported on other schedules within Form 5500.
- Information to Be reported – The following informational columns are required to be reported on the Schedule of Assets (Acquired and Disposed of within Year):
- a. The identity of issue, borrower, lessor or similar party
- b. A description of investment including maturity date, rate of interest, collateral, par or maturity value
- c. Cost of acquisitions
- d. Proceeds of dispositions
Plan sponsors are well advised to develop processes to collect this information throughout the year.
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The information contained herein is not necessarily all inclusive, does not constitute legal or any other advice, and should not be relied upon without first consulting with appropriate qualified professionals for your plan’s individual facts and circumstances.
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