403(b) Plans
In November 2007, the DOL issued amendments to the Form 5500 – Annual Return/Report of Employee Benefit Plan – for the 2009 plan year. One of the changes eliminated the exemption granted to Internal Revenue Code (“IRC”) §403(b) retirement plans of IRC §501(c)(3) organizations, from the Form 5500 reporting, disclosure and audit requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. The removal of this exemption subjects ERISA-covered 403(b) plans to the same Form 5500 reporting and audit requirements as §401(k)-type plans.
Generally, 403(b) plans sponsored by tax-exempt organizations are subject to ERISA whereas 403(b) plans sponsored by governments and most religious organizations are not covered under ERISA.
Many of these plans have been in existence since the late 1950s and companies will be faced with numerous challenges in preparing for the audit, such as gathering plan accounting records, identifying all current and former participant accounts to be included as plan assets, determining the beginning account balances, and obtaining other financial information to be included in the plan’s financial statements. As such, it is highly recommended that plan sponsors embark on gathering the necessary information as soon as possible in order to be able to meet the new requirements.
In response to these changes, the AICPA created a 403(b) Plan Audit Task Force which is chaired by Bob Lavenberg. The Task Force has issued several tools that maybe useful to 403(b) plan sponsors as they prepare to comply with the new rules.
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