Single 5500 for Two 403(b) Plans?

[smit1970]

Client has two 403(b) adoption agreements - a TDA for the employee contribution (Plan 002), and what they call their DC plan for the employer match (Plan 001). Recordkeeper is TIAA. Client filed two 5500s in 2009, and then TIAA "linked" the account balances in 2010 and the employer started filing a single 5500 using the Plan 001 designation. No formal plan merger was completed, and no final 5500 was filed for Plan 002. They take the position that both plans are subject to ERISA.

The employer changed auditors, and the new auditor is recommending a clean-up. Option 1: Take the position that the plans merged in 2010 when the accounts were linked (even though no formal corporate action was taken to merge the documents, and they continue to have two Adoption Agreements and two SPDs). Explore filing a delinquent final 5500 through DFVCP. Prepare a single plan and SPD going forward. Option 2: Take the position that they currently have two plans, and two 5500s should have been filed. Use DFVCP to file the missing 5500s for Plan 002, and amend the exiting 5500s to remove references to the assets from Plan 002. Then perhaps merge the plans formally and move forward with a single 5500.

I understand from a plan adviser contact that this issue is pretty common with TIAA plans following the finalization of the 403(b) regs, so I would love to hear if anyone has encountered it before. Thanks much!

[Flyboyjohn]

I vote for Option 1.

Look at the 2010 5500 and see how the assets from 002 were reflected as coming into 001.Were the 002 assets there for the entire year and subject to the 2010 audit?

Yes, consider filing a delinquent final 5500 for 002 for 2010 under DFVC but sponsor will likely decide not to file if it requires the expense of a short period audit. If IRS hasn't picked up on the 002 delinquency by now chances are they never will and if they dothey'll likely offer DFVC as an out anyway.

Yes, this is how TIAA used to set up 403b plans and hopefully they've changed to the 1 plan approach for new business.

[smit1970]

Thanks!