My understanding is that no audit is required for pension plans with less than 100 participants. (Any cites to confirm?) No audit is required in subsequent years unless the count goes over 120. At what time of the year is the participant count determined (end of year)?

Read the instructions for the 5500 and 5500-C/R. I think your interpretation of audit requirements is incorrect. The only year you're not required to have one is the year during which your count hits 100 but does not top 120. After that, annual audits are required as long as your count (at the BEGINNING of the plan year) is 100 or more.

DOL Reg. 2520.103-1(d) says that "If a plan has between 80 and 120 participants (inclusive) as of the beginning of the plan year, the plan may elect to file the same category of form (i.e., either Form 5500 and attachments or Form 5500-C, or R) that is filed the previous year." So, if a plan goes over 100 but stays below 120, I believe that a 5500-C/R can continue to be filed, and no auditors report would be required. I checked with a large CPA firm and they are doing 5500's this way. Also, for what it's worth, the ERISA Outline Book takes this position.

Hmmm. I HATE it when I'm wrong. Thanks for the info.

For purposes of counting the number of participants, the regulations specify that the number of participants is established as of the beginning of the plan year. ERISA Reg. Section 2520.104-41. This is not the same number as the end of the prior year, as most plans admit participants on the first day of the year.

I have had a couple of plans in the 100-120 range audited by DOL (for unrelated reasons) and they were not looking for an audit since the plan filed a C/R.