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403(b) Plans

Also known as tax-sheltered annuity (TSA) plans, 403(b) plans are retirement plans for certain employees of public schools, hospitals, charities and other tax-exempt organizations. Individual 403(b) accounts are established and maintained by eligible employees. Freed Maxick performs 403(b) plan audits in Buffalo, Rochester, Syracuse, Albany, Western New York (NY) and Erie, PA.

Major Shift in 403(b) Audit and Reporting Requirements: Are You Prepared?

Are you a non-profit organization offering 403(b) pension plans to your employees? If so, the Department of Labor has issued new audit requirements for 403(b) plans.

Effective beginning with year 2009 plans, 403(b) plans are now subject to the same IRS Form 5500 reporting and audit requirements as 401(k) plans. This marks a shift from past years, in which 403(b) plans were exempt from Form 5500 reporting and audit requirements. Keep in mind, the new requirements governing 403(b) plans are not universally applicable, and exceptions exist.How can you determine if you are affected? And, if you are, what are the next steps?

Why is a 403(b) Audit Important?

ERISA-covered 403(b) plans with 100 or more participants generally will be required to file audited financial statements beginning with their 2009 Form 5500 filing. 403(b) plans with fewer than 100 participants may be eligible to use abbreviated reporting forms without audited financial statements. Meeting requirements is an important step in maintaining a quality employee benefit plan and choosing a qualified auditor is crucial to meeting reporting requirements and reaching business goals. Substantial penalties, fees and account adjustments could be required if the IRS discovers problems during a plan audit. Employers could be required to make up contributions they failed to make, and employees could be taxed on contributions they thought were tax-sheltered. Sometimes penalties can be negotiated with the IRS before a closing agreement ending the audit is finalized.

CONTACT US to learn more about our Assurance Services.

ABOUT US: Freed Maxick CPAs, P.C. is Western and Upstate New York’s (NY) largest public accounting firm and a Top 100 firm in the U.S. Freed Maxick provides audit, tax and consulting services to closely-held businesses, public (SEC) companies, not-for-profits and governmental entities in Buffalo, Rochester, Syracuse, Albany and NYC, New York.


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