(b)lines Ask the Expert – Form 5500 Audit/Opinion Letter

April 21, 2009 (PLANSPONSOR (b)lines) - A plan adviser asks: "Will the Form 5500 audit/opinion letter rules apply to 403(b) plans like 401(k) plans?"

Answer from David Powell, Groom Law Group, Chartered


Yes, beginning with the 2009 plan year.  This only applies, of course, to plans that are subject to ERISA.  Non-ERISA plans such as non-electing church plans, governmental plans and “safe harbor” plans do not file Form 5500 annual information returns, and are not required to have an audit.

This also means that what parts of the 5500 that a 403(b) plan that is subject to ERISA will have to file will depend, as with a 401(k) plan, whether the plan is a large plan (generally one with 100 or more participants) or a small plan.  Large plans are subject to the independentaudit requirement.  But even small 403(b) plans will have to provide much more financial and other information than in prior plan years, and plan sponsors may wish to retain accounting firms to assist them in preparing the 2009 5500.

Sponsors of ERISA 403(b) plans should be particularly concerned that, to date, the Department of Labor has not indicated that it is willing to apply the same sort of transition relief and grandfathers for older and dormant contracts that the IRS has for pre-September 25, 2007, Rev. Rul. 90-24 transfers and under Rev. Proc. 2007-71 for other contracts.  Some practitioners, including our firm, have pointed out to the Department of Labor that this could make audits problematic if the employer and auditor cannot determine what contracts they are supposed to be auditing.    

Sponsors of 403(b) plans subject to ERISA should be preparing for these filings now.  The AICPA has provided some information on these new 5500 rules for 403(b) plans HERE .

NOTE: This feature is to provide general information only, does not constitute legal advice as part of an attorney-client relationship, and cannot be used or substituted for legal or tax advice.

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