Summer 2009
Welcome Reporting Relief for 403(b) Plan Administrators
After the Internal Revenue Service issued final code section 403(b) regulations in 2007, the Department of Labor (DOL) separately published Form 5500 revisions and related final regulations effective for plan years beginning on or after Jan. 1, 2009.
Because 403(b) plans have historically been treated as a collection of individual contracts, plan sponsors expressed concern over obtaining financial information about certain pre-2009 contracts and custodial accounts to which the employer is no longer making contributions. In response, the DOL issued Field Assistance Bulletin 2009-02 on July 20, providing much-needed transitional reporting relief for 403(b) plans.
FAB 2009-02 provides relief by easing the requirement that 403(b) administrators treat annuity contracts and custodial accounts as plan assets for purposes of meeting the Employee Retirement Income Security Act’s (ERISA) annual reporting requirements. The relief is not extended to other ERISA requirements such as spousal consent.
For a 403(b) plan to be eligible for the relief, the following conditions must be satisfied:
- The contract or account was issued before Jan. 1, 2009, to a current or former employee
- The employer ceased to have an obligation to make contributions (including employee salary reduction contributions), and in fact ceased making contributions to the contract or account before Jan. 1, 2009
- All of the rights and benefits under the contract or account are legally enforceable against the insurer or custodian by the individual owner of the contract or account without any involvement by the employer
- The individual owner of the contract is fully vested in the contract or account
FAS 2009-02 also states that for reporting purposes, plans do not need to count as participants any current or former employees whose only contracts or accounts are excludable from the Form 5500 or Form 5500-SF under the transition relief.
Another important point in the bulletin is that the DOL will not reject a Form 5500 on the basis of a “qualified,” “adverse,” or disclaimed opinion if the accountant states that the sole reason for such an opinion was based on pre-2009 contracts not being covered by the audit or included in the plan’s financial statements.
With the release of the transitional relief, the DOL can forge ahead with creating permanent relief. View the full FAS 2009-02.
The Standard will continue to stay informed of regulations and
reporting requirements that affect your plan. We are well-prepared
to meet the new DOL’s reporting requirements for the 2009 plan year.
