Many 403(b) retirement plan sponsors admit they do not understanding fully the new federal compliance requirements.
Analysts at the TIAA-CREF Institute, an affiliate of Teachers Insurance and Annuity Association – College Retirement Equities Fund, New York, are reporting that finding in a summary of results based on a survey of 403(b) plan sponsors.
A 403(b) plan is a type of defined contribution retirement plan sponsored by a school or other nonprofit organization.
The Internal Revenue Service issued 403(b) plan regulations in July 2007 that took effect Jan. 1, 2009.
Some 403(b) plans are subject to the Employee Retirement Income Security Act. The U.S. Department of Labor has issued Form 5500 reporting rules that affect those plans.
The TIAA-CREF Institute analysts found that:
- 74% of respondents believe they are fully compliant with the new 403(b) plan regulations.
- 45% of the respondents say they have had difficulty understanding those regulations.
- Only 15% say they could monitor plan loans and hardship withdrawals from several plan vendors through a consolidated report.
The TIAA-CREF Institute analysts found that plan sponsors had a hard time understanding the new compliance standards and new sponsor fiduciary responsibility rules.
Sponsors also are having a hard time getting ready to meet annual plan audit requirements.
Only 54% said they are familiar with the annual audit requirement.
In theory, a sponsor that fails to meet the new requirements could expose all plan assets to taxation, the TIAA-CREF Institute says.
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