403(b) Retirement Plan Compliance. Gary Mauger and Christine Dailey Managing Partners (704) 900-5566 [email protected] www.newpcg.com. Agenda. Key 403(b) regulations First year audit findings Employer responsibilities Next steps Resources for help
Major Changes and Requirements
Written Plan Document
Rule: Remittance must be sent as soon as administratively feasible but no later than 15 business days following the month of withdrawal.
Issue: Late remittances must be reported on the Form 5500 and a correction including lost earnings made for each participant.
Best Practice: No safe harbor for large plans (more than 100 participants). Seven day safe harbor for small plans. Remit ASAP after every payroll.
Rule: Use Safe Harbor Criteria; Stop deferrals for six months
Issue: Who is determining eligibility for hardship? Have deferrals stopped for six months?
Best Practice: Delegate eligibility determination to vendor if possible. Stop deferrals for six months.
Rule: Plan document must accurately reflect actual administrative practice.
Issue: Does the plan document accurately describe key administrative practice such as eligibility requirements, hours of service definition, etc.
Best Practice: Carefully follow the plan document. If changes are made, amend the document.
Rule: Elective deferrals must be calculated on “Includable Compensation” (Total Compensation).
Employer contributionscan be made on a different definition of Compensation.
Issue: If the two definitions of compensation (elective deferrals and employer contributions) are different, this must be administered correctly with payroll deductions and the Salary Reduction Agreement.
Best Practice: Review definitions of compensation for each and revise practice as necessary.
Rule: Plan must be tested for nondiscrimination each year..
Issue: Tests are not performed.
Best Practice: Test annually and retain the results.
Rule: A fidelity bond of 10% of plan assets with a max of $500,000 is required. Annuity only plans may be exempted.
Issue: Many plans now have mutual funds requiring the bond and there is uncertainty about the annuity exemption.
Best Practice: Purchase and maintain a bond.