Audits of 401(k) Plans

SOLUTIONS

CHAPTER 1

Solutions to Knowledge Check Questions

1.    

a.     Incorrect. The named fiduciary is responsible for the general operation and administration of the plan in addition to identifying the plan administrator.

b.     Incorrect. The fiduciary has responsibility to make sure that the plan is operating in accordance with the terms of the plan document, trust instrument, if any, and all applicable government rules and regulations.

c.     Incorrect. The ultimate responsibility for the oversight of the plan including day-to-day administration rests with the fiduciary even if the fiduciary engages various entities to assist it.

d.     Correct. The trustee or custodian is responsible for certifying plan investments, and not the fiduciary.

2.    

a.     Incorrect. A plan with 121 or more participants at the beginning of the plan year does require an audit.

b.     Correct. A plan (1) with fewer than 100 participants at the beginning of the plan year, and (2) that files as a small plan does not require an audit.

c.     Incorrect. A plan (1) with fewer than 100 participants at the beginning of the plan year, and (2) that files as a large plan does require an audit.

d.     Incorrect. A plan with fewer than 80 participants at the beginning of the plan year does not require an audit.

3.    

a.     Incorrect. The 77 vested employees are counted as participants in the plan; however, others must be included as well.

b.     Incorrect. The 77 vested employees and the 12 nonvested ...