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EBSA FAB 2009-02 seems to allow the exclusion of individual annuity contracts for anyone terminated before January 1, 2009. 

A 403(b) plan sponsor (educational institution) has had a required annual audit because of the number of participants, partly because they have been including individual annuity contracts for former employees who terminated in 2008 or earlier and who have not been entitled to receive any employer contributions since 2008.  In the Q&A for Bulletin 2010-01 it seems the initial inclusion of those pre-2009 terminees was optional at the time.  Can the plan sponsor reverse its decision and choose not to include those contracts in plan assets now and also not include those pre-2009 terminees in the participant count?  It might mean they would no longer require an audit because they would fall below the threshold.


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I recall there being several conditions that needed to be met which included a review of the contacts to ensure not legally enforceable against the employer.  I think you can reverse course as long as meet those three or four conditions in FAB 2009-2.  I would get a legal opinion on it.  That will be an interesting conversation if could have eliminated an audit expense for a number of years.  

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I agree with the above.   Kind of a related issue:  If a 403(b) is being terminated, TIAA will "distribute" the individual annuity contracts so that they are no longer plan assets with regard to the plan termination requirements.  Any way we could get this treatment for terminated participants in an ongoing plan?   We have plans that are over the "count" for a required audit just because of terminated participants with individual annuity contracts.

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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