Maybe not. A new rule that affects 403(b) plans this year is the annual audit requirement. There is a lot of confusion out there amongst non-profit organizations as to whether or not their 403(b) plans are required to have an audit. There is a 2-step process in determining if an audit is required.
First, is the plan covered under ERISA? Some plans meet this exclusion in that the employers’ participation in the plan is limited to withholding payroll and submitting withholdings to the investment firm. If the employer makes contributions to the plan or participates in the administration of the plan in any way, the plan is covered under ERISA.
Secondly, how many participants are there? Any plan with 100 or more participants and is covered by ERISA as reviewed above, is required to have an audit in its second year of having at least 100 participants. Any plan with 120 participants and is covered by ERISA is required to have an audit in its first year of reaching 120 participants.
The rules and exclusions can be very confusing regarding the audit requirement. If you need help deciding whether or not you need an audit of a 403(b) plan, or if you’re searching for a qualified audit firm to perform your 403(b) audit, don’t hesitate to ask questions.