School districts and 403b self-audits: are teacher groups opposed?

[Guest Sharron]

Many school districts are hiring third party firms to come in and audit the 403b programs. Has anyone heard of any teachers' groups that have opposed the self-audits? And if so, what the outcome was, or is likely to be?

[Carol V. Calhoun]

I have not heard of a teacher's group opposing such audits. Indeed, such audits are usually in the interests of the teachers or other covered employees as well as the employer. Not only do they directly help to ensure that the plan will not be attacked by the IRS, but they are often the occasion for reviewing the plan generally, which may result in consideration of things like more flexible investment options.

[Guest Sharron]

There is a group in my district refusing to provide information on historical contributions to their plans claiming its an invasion of privacy and the both their local union and the CTA (Calif.) have said that they can't be forced to. The firm doing the audit has said that its faster to get the information from the employees than it would be to dig through district paper records.

[GBurns]

Other than loan info, most, if not all the information exists in the schools payroll etc systems. There are very few employees who should be able to provide much other information.

The employee age, salary (historical etc), 403(B) start date, plan and provider, contributions etc are on file with the school. Previous contibutions under other plans etc are on the application.

It is possible to complete the audit without input frm the teachers. Am I missing something?

[Guest Sharron]

Yes, you're missing that fact that the majority of the information is not computerized at the district, many employees have switched companies and amounts numerious times throughout their careers and most districts (like ours) have warehoused old records.

I agree with the firm doing the audit that the most efficient and accurate way to do it would be to get the information from the employees. Even if they changed amounts from time to time, its thousands times easier to find out from the company via the employee statements, what they've contributed. As opposed to dusting off old records where there is a greater chance of overlooking some form or two.

[Guest Harvey Carruth]

Sharron - Precisely because of the concerns you express, I provide compliance assurance services to public school districts using an efficient, cost effective approach to collecting only current year data from the districts (not from the employees) for almost all participants.

Hence, I disagree with the firm doing the audit if it contends that the most efficient and accurate way to collect data is to obtain the information from the employees. In fact, information of this type obtained from employees is almost never accurate. Moreover, employee provided data protects neither the district nor the employee in the event of an IRS audit.

[Guest Sharron]

These posts are drifting a bit, so allow me to rebute and refocus.

1. If you're only collecting current year data, how do you accurately calculate the 402g limit? and

2. trial and error has proven that the most acccurate way to determine past contributions, especially for long-time employees, is to see employees' account statements. (Plus -- any hardships withdrawals or unallowed investments would also be uncovered.)

So, back to my original question, if there were a legal challange made against mandadory participation in providing information, would it stand-up in court?