Independent Audit Requirements 2009 form 5500

[Guest MonicaS]

We have a client who sponsors a 403(b) plan with over 100 active and former participants. They have some questions regarding the new regulations for Form 5500 reporting for the 2009 Plan year. I have read the Field Assistance Bulletin No. 2009-2 regarding transitional relief for annual reporting and still don't have a clear answer to their question.

403(b) plan has annuity contracts of former participants. It seems that these former participants would fall under the transitional relief because

1) The contract was issued prior to 01/01/2009

2) There were no obligations to make any additional contributions to the contracts prior to 01/01/2009

3) The employer no longer hand any involvement regarding the rights and benefits under the contracts

4) The employees were fully vested

So the question is, can we segregate these former participants from the participant counts, which will in turn drop their participant count below 100 and relieve them from the independent audit requirement?

Hoping one of you has some insight.

[Guest Kevin1]

I have the same issue as MonicaS. Any thoughts on this?

[SheilaD]

We have a client who sponsors a 403(b) plan with over 100 active and former participants. They have some questions regarding the new regulations for Form 5500 reporting for the 2009 Plan year. I have read the Field Assistance Bulletin No. 2009-2 regarding transitional relief for annual reporting and still don't have a clear answer to their question.

403(b) plan has annuity contracts of former participants. It seems that these former participants would fall under the transitional relief because

1) The contract was issued prior to 01/01/2009

2) There were no obligations to make any additional contributions to the contracts prior to 01/01/2009

3) The employer no longer hand any involvement regarding the rights and benefits under the contracts

4) The employees were fully vested

So the question is, can we segregate these former participants from the participant counts, which will in turn drop their participant count below 100 and relieve them from the independent audit requirement?

Hoping one of you has some insight.

I don't have insight - just an opinion. I think that this will relieve them of the independent audit requirement. I have a 403(b) plan that is trying to terminate and all of the contracts meet the definitions above. I'm wondering if I will file a 5500 with 0 participants. Any thoughts? I wonder if the 5500 instructions will offer any guidance.

S

[Guest nmendicott]

I am still looking for an answer to this question. Anyone have any guidance they can share?

I have a plan that is terminated, but still has assets to be distrubted. I need to find the definition of what is considered a participant. I would hate for them to have to have an audit done.

Thanks for your help!

[rcline46]

Try FAB 2010-01. This has more explanations.

[Guest Jeff Ashendorf]

We have a client who sponsors a 403(b) plan with over 100 active and former participants. They have some questions regarding the new regulations for Form 5500 reporting for the 2009 Plan year. I have read the Field Assistance Bulletin No. 2009-2 regarding transitional relief for annual reporting and still don't have a clear answer to their question.

403(b) plan has annuity contracts of former participants. It seems that these former participants would fall under the transitional relief because

1) The contract was issued prior to 01/01/2009

2) There were no obligations to make any additional contributions to the contracts prior to 01/01/2009

3) The employer no longer hand any involvement regarding the rights and benefits under the contracts

4) The employees were fully vested

So the question is, can we segregate these former participants from the participant counts, which will in turn drop their participant count below 100 and relieve them from the independent audit requirement?

Hoping one of you has some insight.

Before you get to 2010-01 -- which could be helpful -- are you sure you're eligible under 2009-02? That is, you don't say whether the contracts in question were individual (as opposed to group) contracts, which they would have to be, and you don't say whether any contributions -- or loan repayments -- were actually made after 1/1/09, as opposed to there being an obligation to make them. Finally, if the contracts meet the requirements to be excluded, do the employees who own the excluded contracts have any other assets in the plan, or are they eligible to participate (i.e., make electives)? If so, then they're still counted towards the 100-participant requirement even if these contracts can be ignored.

[Guest Jeff Ashendorf]

We have a client who sponsors a 403(b) plan with over 100 active and former participants. They have some questions regarding the new regulations for Form 5500 reporting for the 2009 Plan year. I have read the Field Assistance Bulletin No. 2009-2 regarding transitional relief for annual reporting and still don't have a clear answer to their question.

403(b) plan has annuity contracts of former participants. It seems that these former participants would fall under the transitional relief because

1) The contract was issued prior to 01/01/2009

2) There were no obligations to make any additional contributions to the contracts prior to 01/01/2009

3) The employer no longer hand any involvement regarding the rights and benefits under the contracts

4) The employees were fully vested

So the question is, can we segregate these former participants from the participant counts, which will in turn drop their participant count below 100 and relieve them from the independent audit requirement?

Hoping one of you has some insight.

I don't have insight - just an opinion. I think that this will relieve them of the independent audit requirement. I have a 403(b) plan that is trying to terminate and all of the contracts meet the definitions above. I'm wondering if I will file a 5500 with 0 participants. Any thoughts? I wonder if the 5500 instructions will offer any guidance.

S

If the only assets are contracts that are "qualified" for exclusion under 2009-2 (also meaning no contributions or loan repayments since 1/1/09), and there are no employees who are eligible to contribute under the plan, then not only would you have 0 participants, but you would have 0 assets. I don't see how they would even accept a filing that shows 0 Participants and 0 assets at the beginning of the year AND at the end of the year.