Audit Requirement

[Guest RGZ]

Working with a new 501c3 client that is a social service Organization. They have two 403b arrangements with their employees. One is for Union employees and the other is for non union employees. They have 220 union employees and 120 non union employees. The Organization, independent of whether or not the employees (both union and non-union) make a salary reduction contribution, makes the following contribution for the employees. 3% of wages for union and 4% of wages of non-union. There is vesting for the Organization piece. Doing a little research it comes to my attention that once the Organization contributes this makes the arrangement subject to ERISA. The funds are invested in mutual funds. If this is true, would it then mandate the organixation to have a formal plan, file a full 5500 and most importantly have an annual audit. I have been told by some yes others no, but not real comfortable with my answers so far. Thank you!

[JanetM]

It is my understanding you file a 5500 but don't need an audit.

[Guest mjb]

read the instructions for the 5500 form. A 403b plan only completes limited questions, up to 4 or 8. If the employer makes contributions there must be a written document and SPD.

[Guest RGZ]

I have read 5500 instructions and they discuss limited reporting and no audit requirements....then the employer contribution, vesting, eligibility come in to play and wonder if that also meets the exception on the 403b part....i.e still limited 5500 reporting

[Guest mjb]

The instructions are explicit as to which questions must be answered by a 403b plan. The plan only answres the Q that are required since there are no assets held in trust.