Welcome to an ERISA sunscreen moment!
Hi, I’m Dave Dacey and I am the practice leader for WS+B’s Employee Benefit Plan Services Group.
Snow is just around the corner and when shoveling that driveway, start with one shovel at a time.
Move enough shovels of snow from one place to another, and sooner or later your driveway is clean! This is a classic example of my favorite saying, “Inch by Inch, It’s a Cinch, Yard by Yard It’s Hard”!
I’m not going to kid you, shoveling snow is not fun. Do you know what is fun?
Talking about 401(k) plans!
For today’s holiday sunscreen moment, we are going to talk about the 5% disclosure.
GAAP financial statements require that there be a separate disclosure in the financial statements of every investment that comprises 5% or more of the plan’s net assets. This 5% disclosure is analogous to a risk concentration disclosure in a commercial entity financial statements for significant Plan investments.
Reviewing this disclosure and understanding whether there is any particular risk related to the investments in this disclosure is a good idea for today’s fiduciary.
Make sure the disclosure is there and that the amounts presented are consistent with the supplemental schedule of assets held at end of year. Also, make sure you have controls to address risk with respect to the investments in this disclosure.
So merry jingle bells and start looking at your plan’s 5% disclosures! I think you’ll find the experience to be, well, fun!
This has been a sunscreen moment. Use it, and don’t get burned.