Products April 15, 2009

Principal Offers 403(b) Sponsors a Chance to Practice

They say that practice makes perfect--and for non-profit employers that sponsor 403(b) retirement plans, Principal Financial Group is offering to give them a chance to "practice."
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In 2010, 403(b) plan sponsors will face rigorous new reporting requirements including submitting a full Form 5500 and, for larger plans, an independent plan audit. The Principal Financial Group is offering to give them a practice run by sending expanded Form 5500 packets now, along with life count and audit packages, to make the transition to the new reporting requirements easier.
The Principal is providing 403(b) plan sponsors with:
  • 2008 Life Count Package: helps determine if plan is large enough to require an audit and needed for the full Form 5500;
  • Audit Package: gives the plan sponsor a snapshot of the data we provide to help them with future audits including financial information necessary for a limited scope audit;
  • Form 5500 Sample Packet: helps familiarize plan sponsors with the type of information they will need to verify and what missing data they will need to provide for a full Form 5500 report.
These reports are just part of a comprehensive set of tools from The Principal to help plan sponsors get a head start in meeting several new reporting requirements. According to an announcement, other tools include:
  • a white paper: “The Road to Transparency: Form 5500 Annual Reporting, 403(b) Plans and Fair Value Measurements (FAS 157);”
  • a Form 5500 Quick Reference Guide;
  • a review of Value and Reporting of Retirement Plan Assets—FAS No. 157;
  • a “plain language’ fiduciary handbook: “Understanding and Managing Fiduciary Responsibility.”
“For the first time, ERISA 403(b) plan sponsors will face the same financial reporting and auditing requirements as 401(k) plans,” said Aaron Friedman, national non-profit practice leader for The Principal, in the announcement. “We’re helping them ease into the hefty new reporting requirements by providing financial data and reports a year in advance, along with user friendly directions. They will have a clear picture of what data they will need to collect and how to report it when the time comes.”
Compliance April 14, 2009

IRS Releases Proposed 403(b) Prototype Document Program

The Internal Revenue Service (IRS) used PLANSPONSOR's 403(b) Summit to unveil the next step in the tax agency’s efforts to move 403(b) plans closer to their 401(k) cousins.
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Robert J. Architect, IRS Senior Tax Law Specialist, opened the 403(b) Summit in Orlando, Florida by telling attendees that the tax agency considers issuance of the draft revenue procedure and sample plan language supporting it to be significant steps in the evolution of 403(b) regulations. A determination letter could be released as soon as the first quarter of 2010.

“This is the date that 403(b) enters the modern era,” said Architect, who has been the tax agency’s chief spokesman about 403(b) regulation issues. “We don’t see the future. The future is today.”

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Architect said the agency has released:

  • Draft Revenue Procedure 2009-34 that explains how the IRS proposes to run the 403(b) version of the program.
  • 65 to 70 page of sample plan language to support the proposed prototype (see IRS Publishes Sample 403(b) Prototype Document Language).
  • a request for public comments about the prototype proposal by June 1, 2009.

Architect said the IRS anticipates that a prototype submission would primarily come from vendors who anticipate having at least 30 plans adopting the prototype. After it is approved, Architect said the adopting plan sponsors would sign an adoption agreement that would set out how they are customizing the benchmark plan provisions to their own plans.

He said that when the prototype reviews begin, the IRS will be concentrating on whether the document has the proper form. He made a particular point out of saying the IRS will not be reviewing plan funding mechanisms. “That would really bog the program down so we don’t review these,” Architect said.

He indicated that the prototype plans would not provide for vesting and would not apply to church plans or those from related church organizations.

Architect wrapped up his comments by urging the assembled 403(b) sponsors and advisers to 403(b) plans to maximize the transitional relief provided by the IRS to the end of December 2009 to get their required written plan documents in order.

“Use the time constructively up to 12/31/2009,’ Architect said. “I hope we don’t receive letters saying “Please, please I need more time.’ This is the more time.’

The proposed Revenue Procedure is avalable here.

Interested persons are invited to comment on the draft revenue procedure, the sample plan language draft, or any other aspect of the § 403(b) prototype plan program, generally.

Written comments should be submitted by June 1, 2009, to CC:PA:LPD:PR (Announcement 2009-34), Room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Announcement 2009-34), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, D.C.

Alternatively, comments may be submitted via the Internet at Notice.Comments@irscounsel.treas.gov.

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