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Public schools, churches and 501(c)(3) organizations that sponsor a 403(b) retirement plan face additional reporting and plan document requirements thanks to new IRS rules that become effective next year.

Beginning January 1, 2009, 403(b) plan sponsors must have plan documents in place that formally document the terms of their plan in writing in the same way that sponsors of 401(k) plans must document their plans.  Compliance will be especially difficult for organizations that sponsor a 403(b) plan that provides only for employee contributions.  In these plans, the organization is only responsible for remitting employee contributions to the investment provider.  Previously, these types of plans were not required to be in writing, and they had no reporting requirements.  That has now changed.

In addition, many 403(b) plans that also provide for an employer contribution (in the form of a match or non-elective contribution) were previously able to take advantage of abbreviated filing rules.  The 403(b) plan reporting requirements have now changed starting with the 2009 plan year so that all 403(b) plans must now file a Form 5500 (just like 401(k) plans). These plans must also now file financial information which could subject the plan to a plan audit requirement if the plan has more than 100 participants at the beginning of the plan year.

Your Rea advisor can assist you in complying with these new administrative and reporting requirements.

By Paul McEwan, CPA, MT (New Philadelphia office)


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