403(b) Plans - How Many Are There?
As anticipated, the first required financial statement audits of large, ERISA-covered 403(b) retirement plans were fraught with challenges.
But, before the audit process even began, plan sponsors were faced with determining just how many plans they had and which, if any, were subject to the audit requirement. Unlike the environment for 401(k) type plans where plan assets generally are held by one trustee or custodian, 403(b) plans often purported to create a new plan each time a new vendor was added to the investment mix. As a result, plan sponsors needed to determine (often with legal counsel input) how many "plans" they sponsor, where the assets were held and how many were subject to audit.
Additionally, many plans that were believed to have been exempt from the ERISA requirements under the DOL Regulations [29 C.F.R. § 2510.3-2(f)] discovered that they were not exempt. This may have resulted from the plan sponsor exercising impermissible discretion and/or control over the plan and/or due to employer contributions into the plan or matching contributions made to a related plan.
It is expected that plan sponsors of 403(b) plans will continue to face challenges as they continue to evaluate their plans. BDO will continue to work with the AICPA 403(b) Audit Task Force and the DOL to keep our clients and staff informed of new developments.
For additional information regarding 403(b) plans in general, please refer to previous issues of the EBP Commentator.