Safe harbor for not filing a 403(b) 5500

[Bird]

I'm re-posting under 403(b) plans since there was no response in the 5500 section...

An employer has a basic deferral-only plan that meets the safe harbor for not filing a return under DOL Reg 29 CFR 2510.3-2(f). For unknown reasons, they adopted a resolution in 2008 that said "the plan is covered by ERISA." (Don't have a copy of that.) Do you think that, in itself, does make the plan subject to 5500 reporting? The safe harbor describes how a plan is generally subject to Title I but if specific requirements are met, is not subject to the reporting requirements of Title I. Just saying it is doesn't necessarily make it so, IMO.

I suspect they were trying to say that there is a written document, maybe? Is there a reason that I don't know of to go out of your way to adopt a resolution saying a plan is subject "to ERISA?"

Making it weirder is the fact that someone convinced them they should file a return, and someone filed an extension - on August 6. It was rejected. They're he**-bent on filing and paying the late filing penalty, in part because a sister organization has filed under similar circumstances, and the controller has ties to both and assumes they have to do the same thing. I think they don't have enough to do.

[movedon]

My first thought is the resolution that contains the ERISA reference was just a boo-boo - some TPA provided the resolution for plan document adoption or whatever and failed to remove the reference to ERISA from their boilerplate resolution. I agree with you that a resolution that mentions ERISA doesn't by itself make the plan an ERISA plan.

I assume the sponsor is a non-profit. I know there are people in this business (mostly lawyers, I'm guessing) who feel pretty strongly that there are deferral-only plans out there where the sponsor has enough of a hand in the plan that the plan is subject to ERISA. Maybe someone like that has been in their ear. I personally have never seen a deferral-only plan that I felt met that threshold for ERISA coverage, and besides my general advice to any non-profit client with a deferral-only plan that they need to be mindful of staying "hands-off" (and that it might be a good idea to offer more than one vendor), I confess that I don't spend a lot of time worrying about it. In my world, non-profit sponsor + deferral-only 403(b) = not covered by ERISA.

[Bird]

Thanks for the feedback!

[mbozek]

I'm re-posting under 403(b) plans since there was no response in the 5500 section...

An employer has a basic deferral-only plan that meets the safe harbor for not filing a return under DOL Reg 29 CFR 2510.3-2(f). For unknown reasons, they adopted a resolution in 2008 that said "the plan is covered by ERISA." (Don't have a copy of that.) Do you think that, in itself, does make the plan subject to 5500 reporting? The safe harbor describes how a plan is generally subject to Title I but if specific requirements are met, is not subject to the reporting requirements of Title I. Just saying it is doesn't necessarily make it so, IMO.

I suspect they were trying to say that there is a written document, maybe? Is there a reason that I don't know of to go out of your way to adopt a resolution saying a plan is subject "to ERISA?"

Making it weirder is the fact that someone convinced them they should file a return, and someone filed an extension - on August 6. It was rejected. They're he**-bent on filing and paying the late filing penalty, in part because a sister organization has filed under similar circumstances, and the controller has ties to both and assumes they have to do the same thing. I think they don't have enough to do.

If they want to go through the pain of filing under the new 5500 requirements and pay the late fee for failure to file for both years why not let them do it? (Last time I looked the fine was a max of $750 per year if the 5500 is filed late. Dont know if this is still the max penalty) My one question is whether they will be subject to the audit requirement in 2009 for plans with more than 100 participants which could cost 10K.

The other possibilty is whether they could have one plan for both organizations to reduce the filing to one 5500.

[Bird]

If they want to go through the pain of filing under the new 5500 requirements and pay the late fee for failure to file for both years why not let them do it?

Because I'm stubborn.

(Last time I looked the fine was a max of $750 per year if the 5500 is filed late. Dont know if this is still the max penalty)

It is.

My one question is whether they will be subject to the audit requirement in 2009 for plans with more than 100 participants which could cost 10K.

Nah, it's only a handful of people.

The other possibilty is whether they could have one plan for both organizations to reduce the filing to one 5500.

No, I used the term "sister organization" loosely.

[John Feldt ERPA CPC QPA]

No, I used the term "sister organization" loosely.

A loose sister organization? Would that be an anti-nun organization? Maybe I read that wrong...