Nonprofit employers need flexibility from the U.S. Department of Labor to cope with new 403(b) plan Form 5500 filing rules, according to the American Society of Pension Professionals & Actuaries.

ASPPA, Arlington, Va., and its National Tax Sheltered Accounts Association division are following up on a request for transitional relief that they filed Oct. 8, 2010, with the Labor Department’s Employee Benefits Security Administration (EBSA).

Form 5500 is the form benefit plans use to submit reports on their operations to the Labor Department, the Internal Revenue Service and other federal agencies.

EBSA recently imposed a rule requiring the nonprofit employers that sponsor 403(b) retirement plans to file independent audit reports along with their Form 5500s. The 403(b) Form 5500 requirements have been in the works for years.

Many nonprofit employers have trouble meeting the financial statement requirements, and many find the cost of an audit – which can range from $50,000 to $100,000 per plan – to be staggering, ASPPA and the NTSAA say in a statement about the request for relief.

ASPPA and the NTSSA are asking for 3 main types of relief.

1. Opening Balance Relief

ASPPA and the NTSSA would like to see EBSA accept the financial statements of the employer based on a documented good faith effort and only require an auditor’s opinion for financial activity for the current year, assuming a correct opening balance. ASPPA and NTSAA say this measure would resemble transitional relief that was provided when

the Employee Retirement Security Act was first enacted.

2. Disclaimed Audit Relief

ASPPA and the NTSSA say EBSA should issue a rule ensuring that an audit will provide useful information even if the auditor lacks the information to issue a formal opinion about a plan. If an auditor cannot form an opinion, it could still discuss the business controls of the plan sponsor or other relevant financial matters, ASPPA and the NTSAA say.

3. Develop 403(b) Plan Auditing Guidelines

ASPPA and the NTSAA are asking EBSA to form a committee of industry experts to suggest, review, and modify existing audit guidelines.

“Plan sponsors simply don’t have the money to cover expenses of this magnitude,” ASPPA and the NTSAA say. “The 403(b) plans affected are offered by tax-exempt charitable organizations, which were hit hard by the economic downturn. Efforts to avoid layoffs and continue benefits have exhausted most personnel budgets.”