New Auditing Requirements for 403(b) Plans

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

The 2009 Form 5500 has been revised, and it requires many previously unaudited 403(b) plans to be audited for the first time. Historically, there have been limited filing requirements for 403(b) plans. In fact, most 403(b) plans are often treated more as individual account arrangements than a formal plan. These changes made by the Department of Labor will force plan sponsors to treat their 403(b) plan the same as any other pension plan for the purpose of annual reporting requirements.

While the audit requirements are not effective until plan years beginning on January 1, 2009 or later, it’s something that you’ll need to start considering if your 403(b) plan has more than 100 eligible participants at the beginning of your 2009 plan year. Eligible participants include not only current employees that actively participate in the plan, but eligible employees that have declined to participate and any former employees that may have an account balance with the plan.

Because this is a new requirement, 403(b) plan sponsors may initially face significant challenges to complete the audit including providing accurate financial information, obtaining participant records, and taking a more active role in plan administration. The Form 5500 requires the Statement of Net Assets to be comparative, so 2008 financial information will need to be included in the plan’s 2009 audited financial statements, as well.

If you are a 403(b) plan sponsor, consider if you will need to prepare for an audit of your plan for 2009. Because some 2008 information will be needed, it’s not too early to start preparing. Below is a link that gives some good step-by-step information on how to get ready for these new requirements. If you need additional information about a 403(b) plan audit, please contact us for assistance.

Getting Started: Meeting the New Form 5500 Reporting and Auditing Requirements

Jessica Puckett, CPA, CFE