End-of-year Checklist for ERISA 403(b)s

Richard Turner, Vice President and Deputy General Counsel, VALIC, reminded attendees that although the effective date of having a written plan in place was extended to December 31, 2009, the relief was conditional on plans operating in compliance with the new regulations effective this year, so sponsors should look back and clean up any operational defects in plan administration. The written plan requirement is not new for ERISA-governed 403(b)s; however, Turner said under the new regulations, the written plan must list providers, so sponsors may have to amend their plans to include that list or at least reference the list via an external document.

Plans no longer receiving contributions (frozen) still must have a written plan document.

Compliance requirements for ERISA 403(b)s include all the requirements Turner discussed pertaining to non-ERISA 403(b)s in an earlier Webcast, with a few additions (see End-of-year Checklist for Non-ERISA 403(b)s). For example, in addition to universal availability rules, ERISA plans are subject to ACP testing (see Things to Know about Average Contribution Percentage Testing).

Also, ERISA plans are now required to file a full Form 5500 starting with 2009 plan year reporting, and plans with over 100 participants are required to perform and audit. Sponsors of ERISA 403(b)s should look to plan providers to provide information for the reporting or to provide forms themselves for sponsors and their counsel to review, Turner reminded Webcast attendees that the Department of Labor provided some relief on including data from certain old providers and on including a disclaimer that the auditor relied on what information that could be obtained (see DoL Relief on Form 5500 Reporting Requirements for 403(b)s).

While the DoL has not specifically answered the question for ERISA plans – beyond identifying what needs to be included on the Form 5500 – Turner said it is assumed that all providers are considered in the plan if they have assets related to plan that have not been distributed or transferred out of the plan.

For sponsors that may have to coordinate loan, hardship, or contribution limit compliance between ERISA and non-ERISA plans, Turner noted that often the ERISA plan has a provider that automatically coordinates information. In addition, some sponsors that maintain both an ERISA plan and a non-ERISA plan have non-ERISA plan providers agree to share data in return for being able to access information about other plan accounts.

Corrections of plan defects are available for ERISA plans through the Internal Revenue Service’s Voluntary Fiduciary Correction Program (VFCP).