Fiduciary Responsibility and Valuation Reporting

As the plan Trustee, you have a fiduciary responsibility to determine the value of your company each year. This value is used to prepare your retirement plan’s Form 5500. An accurate valuation is critical for maintaining compliance and minimizing audit risks.

Why Does the Company Valuation Matter?

• It impacts the plan's overall financial reporting.
• It demonstrates your due diligence as a fiduciary.
• Errors or unsupported valuations could trigger IRS or DOL scrutiny during an audit.

What Is FranFund’s Role?

FranFund’s role is limited to reporting the valuation figure provided by you on Form 5500.

What Are Your Responsibilities?

1. Determine the Valuation Methodology: Select a method appropriate for your business (e.g., asset-based approach, income approach, or market approach).
2. Calculate the Fair Market Value: Use reliable data to calculate the 12/31 value of your company.
3. Retain Supporting Documentation: Keep a copy of your Profit and Loss statement, Balance Sheet, and any other records used to support the valuation.

What Happens If You’re Audited?

If your retirement plan is audited, the IRS or DOL will request documentation supporting your company’s value. It is your responsibility to provide this information.

FranFund highly recommends, but does not require, that you submit the data to your TPA for easy access in the event of an audit.

          - Log in to your PlanSponsorLink account.

          - Navigate to the "Data Collection" tab to locate the "Collection" web form

          - Scroll to "Files"

          - Click "Add" to initiate the file upload.