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Don’t Fall into a Form 5500 Audit Trap

Gina Gurgiolo of the Multnomah Group offers a sprightly rundown of the most common Form 5500 audit traps — that is, responses on the 5500 that are most likely to draw attention from the IRS or DOL. The traps include:

• Incompleteness
• Inconsistencies
• Disappearing participants
• “Other” assets
• Late deposits of deferrals
• No fidelity bond

Also featured: tips on how to avoid falling into one of these traps. The bottom line is one that any parent of a pre-teen will recognize: The best way to avoid trouble is to always do the right thing when no one is looking, and correct mistakes as soon as they are found.

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