403(b) Filing Requirements for Plan Year 2009
The Internal Revenue Service (“IRS”) in conjunction with the Department of Labor (“DOL”) released reporting requirements for 403(b) plans effective for plan years beginning after December 31, 2008. Previously, tax-exempt organizations with 403(b) plans were subject to very limited requirements, including no requirement for a written plan document and limited reporting on Form 5500, Annual Return/Report of Employee Benefit Plan. However, recent changes impacting 403(b) plans may require additional reporting, and several of the changes may require immediate action from 403(b) plan sponsors.
One such change includes the new requirement that 403(b) plans maintain written plan documents. The IRS has indicated that its Employee Plans division is developing programs similar to 401(k) plan programs, including a determination letter program and a pre-approved plan program. It is unlikely that the new programs will be in place by January 1, 2009; however, employers with 403(b) plans must take appropriate steps to ensure their plans are in writing by December 31, 2008.
Another significant change includes additional disclosure requirements on Form 5500 for certain 403(b) plans subject to Title I of ERISA. For the 2009 plan year, ERISA 403(b) plans will be subject to full financial disclosures. For large plans, this may require an annual audit by an independent firm, similar to the current 401(k) plan rules. Employers should determine if their 403(b) plans meet the ERISA safeharbor or whether they should begin planning for additional disclosures and an annual audit.
Finally, the IRS and DOL have established a new form for small plans, Form 5500-SF. This version of the Form 5500 is a new simplified annual reporting form for plans with less than 100 participants. The IRS estimates that nearly 600,000 small plans will be eligible to file this short form beginning in 2009.
If you have any questions or would like additional information on this legislation, please contact the expert listed below at (800) 270-9629.
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