Form 5500 requirements

[Fred Payne]

Company A is terminating its 403(B) plan to replace it with a 401(k) plan. I know the Plan termination is not a distributable event and its assets cannot be rolled into the 401(k). As participants terminate, distributions will be affected until either all assets are gone or the IRS allows for a distribution prior to employment termination.

Here's my question: Must the Plan Sponsor continue to file a 5500 each year even with no contributions being made, either employer or employee? The 403(B) asset pool includes Employer contributions.

Thanks.

[jpod]

There is no answer to your question. I won't go into the technical reasons why it's an issue, but the DOL knows it's an issue which people are talking about but refuses to provide an answer. If you want to be safe, continue to file.

[mbozek]

403(B) plans have no assets because the employees accounts are held in an annuity contract/ mutual fund owned by the employee, similar to a SEP or Simple IRA. When the plan terminates there is nothing to distribute so the plan files its final 5500 for the last year in which contributions are made. Otherwise the er would have to file a 5500 as long as there were assets in any participant's account. The lack of assets is why 403(B) plans do not have the same filing requirements as qualfied plans.

[jpod]

MBozek states the excellent argument to be made if you were forced to defend not filing.

Nonetheless, the government's position is not clear, so if you want to be safe you should file.

[jpod]

Let me modify my last post.

While you may be "safe" in the sense that you may ultimately prevail even if you do not file, you should file if you wish to avoid aggravation. Don't forget, completion of a 5500 for a 403(B) should take about 3 seconds (figuratively speaking).