Form 5500

[Guest ernieg]

We have been recently reviewing a non-governmental, non-for-profit (501©(3)) organization’s retirement plan. The organization has approximately 80 employees and they maintain two 403(b) plans (not sure of the rational for maintaining two plans), one for employee deferrals and one for the employer’s defined contribution of 3.3% for all employees.

A few issues have surfaced and I am not sure if they are applicable. First, it is my understanding that once an employer is materially involved in the plan, such as making contributions, then the plan is subject to ERISA reporting. In this case the organization did file a Form 5500 in 2001 and in 2005, however no Form 5500 has been filed for 2002, 2003, and 2004. Query: Are they subject to the late filing rules as outlined in ERISA and would they be candidates for the VCRS?

Second, they have not been testing their plan for discrimination or top heavy. How would this be corrected dating back to 2001? Thank you.

[Guest mjb]

5500 only are required for plans where employer makes contributions. Salary reduction only 403b are exempt from 5500 filing/ERISA. See 5500 instructions. There is no ADP testing on employee contributions to a 403b. Nondiscrimination testing of er contributions is not necessary if uniform % of comp is made for all eligible participants. (414s testing may be required if comp is defined as something other than W-2). TH rules do not apply to 403b plans. Back 5500s can be filed w/dol for max penalty of $750 or 1500 for all missing years.

[Guest ernieg]

MJB, thanks. I appears as though we are okay in this situation with the exception of the non-filing of Form 5500 for those years. Thank you.