Peery & Associates, Inc.

August 11, 2009, by Catherine M. Peery, Peery & Associates, Inc. www.ben-e-fit.com

What is happening with 403(b) Plans for Nonprofits?

New IRS regulations became effective January 1 st , 2009. These reforms were originally announced in 2007 for implementation in 2008, but a grace period was allowed to give nonprofits some time to adapt to major changes. This is the first time in forty years that any changes at all have been made to 403(b) plans!

It's coming down to the wire: All 403(b) Plans are now required to have a written document signed by December 31, 2009, regardless of plan type (ERISA or non-ERISA).

Your retirement plan administrator can help you determine whether your plan's current design will cause new ERISA requirements to be enforced.

If your plan must comply with ERISA requirements, you must file a full Form 5500 with the IRS and Dept. of Labor by July 31 st , 2010 for calendar year plans. This is a big deal because it bears little resemblance to the truncated 5500 you are used to signing off on.

If you do not want to go through this process, you must maintain or establish a "non-ERISA" 403(b) Plan by observing the following constraints:

No employer contributions can be made
Universal availability for 403(b) deferrals is required for everyone except part-timers and students
At least two (2) investment vendors must be offered

This may make offering a 403(b) more expensive than a 401(k) for some nonprofits, and the boards of those organizations need to know the available options, and the advantages and disadvantages of each plan design, whether they offer one kind of plan or both. Either plan is going to require an official plan document that incorporates new regulations by the end of 2009, so now is a good time to sit down with a pension consultant and figure out which plan will work best for you.

For a more complete explanation of these concepts, Catherine M. Peery at Peery & Associates, Inc. will be presenting a complementary webinar on Thursday, September 3, 2009, on document design issues, 403(b) versus 401(k), new fiduciary responsibilities, the new 5500 requirements, and preparing for the audit. To register e-mail jake@ben-e-fit.com or call , Jake Bowman, 888-879-1846 x 103, direct: 650-879-0126.

For more information please call or e-mail Catherine Peery.

Catherine@ben-e-fit.com
(650) 879-0150