403(b) Summit: New Form 5500 Regs Mean "Scary" 2009 Plan Year for 403(b) Sponsors

April 22, 2008 (PLANSPONSOR.com) - Amelia Island, FL - The "scary" time for 403(b) sponsors starts with the 2009 plan year, attendees at a PLANSPONSOR 403(b) Summit discussion group were told.

The reason: new Pension Protection Act (PPA) regulations mandating more comprehensive Form 5500 reporting (See Regulators Unveil PPA Changes to Form 5500 ) and a demand that the annual report for Employee Retirement Income Security Act (ERISA) plans be posted on an employer’s Intranet within 90 days of it being filed.

Phyllis E. Klein, Managing Director, CAPTRUST Financial Advisors, and Bob J. Toth, a partner at Baker & Daniels, LLP, did not mince words about what lay ahead – particularly since so many 403(b) plans are operating in a multi-vendor environment. “This time next year, we’re going to have a lot of scariness going on” when it comes to data collection, declared Toth. “This is going to be one of the most serious challenges you have to face.”

“It’s worth taking a look at because you are going to have to deal with things you’d never thought you’d have to deal with,” Klein added.

On a less daunting note, Klein and Toth told Summit attendees a 403(b) plan sponsor who wants to choose a Fiduciary Adviser under the PPA will have lots of potential candidates, including registered investment advisers, banks or insurance company representatives, or broker/dealers or certain affiliates. “It’s a pretty wide net they’ve cast about who can do this,” Klein said.

Panel attendees were reminded by Toth and Klein that the PPA requires that:

  • the advice dispensed is based on a computer model,
  • the adviser and his/her supervisor have level compensation – not dependent on the specific investment vehicles suggested,
  • the adviser disclose all fees and affiliations, and
  • the adviser is audited annually.

Finally, Klein and Toth pointed out, a plan fiduciary must authorize the Fiduciary Adviser’s appointment and be responsible for ongoing monitoring and evaluation of that person’s performance.

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