Accounting Question - 409A Plans

[BulldogTom]

Are any of you 409A accounting experts?  I have a situation where I am not sure how to post a transaction in the books.  I inherited these books.

Client has a 409A plan for key employees.  They can contribute and the company can make discretionary contributions.  The discretionary payments are vested over time.  The plan invests in a series of IUL insurance policies. 

Several employees left the company (were pushed out) and the company cashed out some of the insurance policies to pay the employees their contributed and vested portions of their balances in the plan.  Some of the discretionary contributions and earnings were forfeited by the employees.  However, the policies cashed in were worth more than the amount paid, and the corp received a 50K check that is now sitting in an expense account as a credit.

The chart of accounts only has the Liability to the employees (vested portion) and the cash surrender value of the plan in the assets.  I think I should also see an account for the administrative expenses of the plan, but there is not one.  Plan expenses may be buried somewhere else in the books, but I haven't found it yet.  According to the plan administrator, the balances I show in the TB for the Asset and the Liability at 12/31/14 are not the amounts they show from their year end reports to the client.

I think the 50K should be posted to the cash surrender value of the plan asset account.  Am I right?

Thanks

Tom
Newark, CA 

 

[kcjenkins]

Not an expert on them, but I agree that the expenses should be a line item, I'm guessing they are in Professional Fees, or lumped into some administrative overhead accounts.   And I would post the 50K to the cash surrender value of the plan asset account.