ASPPA Recommends Form 5500 Exclusion of Pre-2009 Contracts

April 8, 2011 ( - The American Society of Pension Professionals and Actuaries (ASPPA) recommends that the Department of Labor (DoL) issue regulatory guidance to allow 403(b) contracts issued before 2009 to be excluded from the Form 5500 financial statements.

In its response to the request for comments on how the DOL can improve any of its significant regulations by modifying, streamlining, expanding, or repealing them, ASPPA also recommended that the DoL appoint a committee of experts to review and suggest modifications to the audit guidelines for 403(b) plans. ASPPA and the National Tax Sheltered Accounts Association (NTSAA) previously raised their concerns in a letter sent to the DoL (see ASPPA Again Requests Audit Relief for 403(b)s).  

In its new letter, ASPPA explained that the current relief offered under Field Assistance Bulletins (FABs) 2009-02 and 2010-01 is not providing the benefits anticipated because the auditing community has generally not accepted the information on which the 2009 plan year starting account balances were established. Auditors have indicated that they are constrained by the requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and that the FABs are insufficient.  

ASPPA contends that the new enhanced 2009 reporting obligations for 403(b) plans have presented challenges similar to those faced by plan sponsors when ERISA was enacted. At that time, the DoL recognized the problems plan sponsors would have in determining opening balances for the initial independent audit, and provided relief using its authority under ERISA § 110.   

In particular, the Department issued ERISA Regulation § 2520.103-7, which relieved plans for their initial reporting year from the obligation to: 

  • Display at current value, the statement of assets and liabilities of the plan, as of the end of the previous year; 
  • Engage an independent qualified public accountant to conduct an examination of the plan’s financial statements for the plan year or trust year covered by the initial annual report; and 
  • Include with the initial annual report, the opinion of an independent qualified public accountant as to whether the financial statements for the close of the initial plan year are presented on a basis consistent with that of the preceding year. 


ASPPA said it believes the transitional problems faced by 403(b) plan sponsors in complying with the new reporting rules are every bit as daunting as those present when ERISA was enacted, so it requests that the DoL exercise its authority under ERISA § 110 by: 

  • issuing regulations that adopt the positions taken by the DoL in FABs 2009-02 and 2010-01; and 
  • establishing a committee of industry experts to suggest, review and modify the existing audit guidelines for 403(b) plans.  


ASPPA said the committee should specifically consider: 

  • The differences between group annuities, individual contracts, and individual custodial agreements and the potential for different audit requirements for each; 
  • The need for relief and clarification that beginning balances as of January 1, 2009, are absolute for all purposes under applicable auditing standards, and that auditors may modify their standard procedures and accept data provided as of January 1, 2010; 
  • Creation of a model “Audit Checklist” for 403(b) plans that is specific to 403(b)s and does not contain qualified plan requirements; and 
  • Better coordination between the DOL’s rules and the Internal Revenue Service compliance rules by creating educational communications and training materials specifically focusing on 403(b) plans for employers, vendors, auditors and administrators. 


ASPPA’s letter is here.