403(b) plans have been a benefits staple of nonprofit organizations for many years. Up until 2009, the Internal Revenue Service and Department of Labor paid these plans very little attention; regulatory guidance was sparse and reporting requirements minimal. This all changed when ERISA-covered plans were required to look and feel much more like their qualified plan counterpart, the 401(k) plan. To that end, both the IRS and DOL have undertaken various outreach activities aimed at keeping 403(b) plans compliant and protecting plan participants.
Recently, the IRS updated the 403(b) Plan Checklist that it publishes on its website. This is a good tool for employers to use as a starting point for managing their plan. The goal in maintaining any employer plan is to not be asleep at the wheel, so to speak, and to find errors as soon as possible. It’s very easy to make mistakes while maintaining a plan and the regulatory agencies recognize this. The key is to understand that managing a plan is a real responsibility that takes time and effort.
The checklist addresses many of the areas that pose difficulties for 403(b) plan sponsors. Fundamentally, the plan needs to be in writing and it needs to be operated based on the written provisions. This is the most important of all retirement plan administration tenets. The Internal Revenue Code has myriad limits that need to be adhered to, and exceeding any of these limits results in corrective action being required by plan sponsors. Unlike other retirement plans, 403(b) plans are subject to the Universal Availability Rules and plan sponsors seem to lose track of this unique feature. The checklist provides a description of these requirements and several others, along with a summary of how to proceed in the event an error has occurred.
Please contact Mark Flanagan of Aronson’s compensation and benefits practice at 301.231.6257 to discuss the rules associated with administering a 403(b) plan or any other retirement plan vehicle.
Congratulations! March 15th has come and gone and your 401(k) compliance testing is done and refunds have been issued. Now you can relax! Or can you? You still need to make sure your Form 5500 is filed for last year. Failing to file on time or failing to file the Form 5500 with audited financial statements, if required, can be quite costly. Don’t let this deadline sneak up on you.
Form 5500 must be filed electronically by the last day of the 7th calendar month after the plan year-end. For calendar year 2013 plans, this is July 31, 2014. Filing an automatic extension, Form 5558, extends the deadline an additional 2 ½ months, to October 15th for calendar year end plans. A penalty of up to $1,100 a day can be assessed for each day a plan administrator fails to file a complete and accurate return!
That deadline may seem far away, but if you are a large plan filer (generally more than 100 participants at the beginning of the plan year) and you must file audited financial statements with your Form 5500, you need to start the process
It’s the time of year to start thinking again about the audit of your benefit plan. If you are happy with the service you receive, and your audit goes smoothly and the deadline is met, that’s great! However, if you typically just go through the motion of engaging the same firm you have always used, you may be doing yourself a disservice. Be sure to ask yourself these questions:
The Internal Revenue Service has announced the 2014 cost-of-living adjustments for various limits affecting employee benefit plans. The more common limits are detailed below for 2013 and 2014.
If you have any questions about how these limits apply to you, please contact Mark Flanagan of Aronson’s Employee Benefit Plan Services Group at 301-231-6257.
Under the Patient Protection and Affordable Care Act “PPACA,” certain types of health insurance arrangements will be required to pay a new fee by July 31, 2013. The fee is called the Comparative Effectiveness Research Fee or the PCORI fee because the monies will be used to help fund the Patient-Centered Outcomes Research Institute. The types of arrangements subject to the fee are:
The fee will be reported to the IRS via Form 720, but the revised Form 720 has not yet been made available.
In general, plans with year-ends between October 1, 2012 and December 31, 2012 must file