In our continuing series of FAQs on EFAST2, we are addressing the issues and procedures with which the 5500 preparers and plan sponsors will need to familiarize themselves to make the transition to electronic filing.

This article focuses on how EFAST2 will affect the Form 5500 filing requirements for 403(b) plans. In addition, the article discusses the DOL’s changes to the Form 5500 filing requirements for 403(b) plans.

Do the mandatory electronic filing requirements (EFAST2) apply to 403(b) plans?

Yes. Therefore, an officer of the plan sponsor will need to obtain filing signer credentials in order to electronically sign the Form 5500. If someone else will sign as plan administrator, that individual will also need filing signer credentials.

What changes apply to the 403(b) plan Form 5500 filing requirements for 2009?

Commencing with the 2009 plan year (generally filing in 2010), the limited reporting exemption which has applied to 403(b) plans no longer applies. Therefore, 403(b) plans now will need to (1) complete the entire Form 5500, (2) complete applicable schedules (including the financial schedule), and (3) comply with the plan audit requirement or the small plan audit exception.

Will the change in the 403(b) Form 5500 filing requirements affect which 403(b) plans need to file?

No. The new 403(b) Form 5500 filing requirements do not affect which plans need to file. The new requirements only affect what needs to be filed. In other words, 403(b) plans that are not subject to ERISA (government, church and deferral-only plans that satisfy the safe harbor exemption) continue to be exempt from the Form 5500 filing requirement. However, deferral-only plans may have a more difficult time qualifying for the exemption under the new written plan requirements. See FAB 2007-2.

May a 403(b) plan file a Form 5500-SF?

Yes. If the 403(b) plan meets the conditions to file a Form 5500-SF, it may file the form. The DOL expects that most small plans will be eligible to file the short form.

Has the DOL provided any relief with respect to reporting pre-2009 403(b) contracts?

Yes. Solely for purposes of Form 5500 (including the audit), the DOL will not regard an annuity or custodial account as a part of an ERISA 403(b) plan if the investment meets the following requirements: (1) the contract or account was issued to a current or former employee before January 1, 2009; (2) the employer ceased to have any obligation to make contributions (including deferrals), and in fact ceased making contributions to the contract or account before January 1, 2009; (3) all of the rights and benefits under the contract or account are legally enforceable against the insurer or custodian by the individual owner of the contract or account without any involvement by the ER; and (4) the individual owner of the contract is fully vested in the contract or account. Auditors may qualify their opinion if the pre-2009 asset records are not available, but the DOL has said they will accept the qualified opinion.

If a 403(b) plan includes investment options from different vendors, does IFILE provide a feature whereby the different vendors can collaborate in completing the Form 5500 (and schedules)?

No. However, some third party software providers (e.g., Relius Web Client) will include such a feature.

Will 403(b) plans be subject to the public disclosure requirement?

Yes. All 403(b) plans that file a Form 5500 will be publicly disclosed on the DOL’s website.

If a 403(b) plan terminated before the beginning of the 2009 plan year, will the plan be subject to EFAST2 and the new Form 5500 filing requirements?

No. However, if the plan does not complete distributions before the first day of the 2009 plan year, the plan is subject to both mandatory electronic filing and the new Form 5500 filing requirements.

EFAST2 Workshop. Would you like a concise letter explaining to employers the steps in obtaining filing signers credentials? Would you like an EFAST2 checklist explaining each of the steps required for electronic filing? In addition to the seminar, attendees will receive two important tools: an EFAST2 checklist and a concise letter instructing employers how to obtain required credentials. We also have scheduled two other seminars to follow the EFAST2 Workshop – Plan Forms, Notices and Amendments and the ERISA Workshop.

For more information on Relius 5500 Web Client, our EFAST2 solution, visit: Relius 5500 Web Client.