403(b) Outlook: New 5500 Reporting Rules

August 27, 2008

403b Outlook Archive 403(b) Outlook Archive

What is the rule? According to final regulations published by the IRS, DOL and PBGC, all 403(b) plans subject to ERISA must answer the same Form 5500 questions and file the same financial schedules as qualified 401(a) and 401(k) plans subject to ERISA. In addition, large 403(b) plans (generally plans with 100 or more participants at the beginning of the plan year) will be required to provide an independent auditor’s report. And, all Form 5500 reports and schedules must be filed electronically. This is a major new reporting requirement for 403(b) plan administrators.

How TIAA-CREF helps: TIAA-CREF is preparing new materials and developing technologies that will help enable plan administrators of 403(b) plans to comply with the new 5500 reporting requirements.

What has changed? Administrators of 403(b) plans are not currently required to complete all of the questions on Form 5500 or to include any of the schedules with the annual filings. Administrators of 403(b) plans need only complete Part I and Part II, lines 1 through 5, and 8 (enter pension feature code 2L, 2M, or both). You do not have to hire an independent qualified public accountant, or attach an accountant’s opinion to the Form 5500. In addition, you can file Form 5500 either electronically or by hand. We will be providing more information and details throughout 2008.

Effective date: You will need to electronically file a more detailed Form 5500, financial schedules (e.g., disclosure of fees paid to service providers on Schedule C) and independent auditor’s report (applicable to large plans) beginning with the 2009 plan year. You need to file Form 5500 by the last day of the seventh month following the end of the plan year. For calendar-year plans, you will need to file on or before July 31, 2010.

What happens if you fail to comply? Your institution could be subject to substantial penalties and fines if you file Form 5500 after the due date or do not request an extension.

Read more about Form 5500 filing and reporting.

Next week’s issue: Form 5500 Audit Requirements

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