What To Expect In The Event Of An April 19, 2018 What To Expect In The Event Of An 403(b) IRS AUDIT? May 16, 2019 Robert McLean President & CEO

Written Plan Document & Adoption Agreement April 19, 2018 Agreements Written Plan Document & Adoption Agreement What is the IRS Pre-Approved 403(b) Plan Document Program? Program introduced in 2013 Designed to provide assurance that a 403(b) pre-approved plan document meets IRS regulations There are two types of pre-approved plan documents: Volume Submitter Prototype In 2017 the IRS issued advisory or opinion letters to vendors giving their plans the “IRS Stamp of Approval”

What are the benefits of adopting a pre-approved 403(b) plan document? April 19, 2018 What are the benefits of adopting a pre-approved 403(b) plan document? IRS pre-approval as to the FORM of the plan document Remedial Amendment Period Adoption of pre-approved plan document allows the plan sponsor to correct prior defects as of January 1, 2010. Remedial Amendment Period ends March 31, 2020 Now is a good time to review your existing plan document to ensure that plan features are meeting the needs of your employees Eases IRS Audit burden

Written Plan Document & Adoption Agreement April 19, 2018 Agreements Written Plan Document & Adoption Agreement Is your plan up to date & operating in accordance with the written plan? What does your plan allow for? ROTH option ROTH 403(b) allows you to contribute after tax dollars and withdraw TAX FREE dollars (contributions and earnings) when you retire. Employer non-elective contributions Tax savings for BOTH the employer and employee: NO FICA or Medicare TAX Not included in elective deferral limit CAVEAT: There can be no “cash option” - Special language is required in agreements to ensure no cash option.

Collective Bargaining Agreements April 19, 2018 Agreements Collective Bargaining Agreements Does contract language properly support non-elective contributions? Do you receive counseling concerning proper contract language?

Information Sharing Agreement (ISA) April 19, 2018 Agreements Information Sharing Agreement (ISA) Does your ISA provide the necessary indemnities and protection? Does your ISA provide for the proper and efficient handling of funds? Do you maintain ISAs with each of your approved plan providers or are you protected by your TPA’s ISA? Employer account agreements – Custodial & Annuity

Agreements TPA Service Agreement What protections are you provided? April 19, 2018 Agreements TPA Service Agreement What protections are you provided? Is there clear delineation of responsibilities?

Universal Availability (UA) April 19, 2018 Universal Availability (UA) Who is eligible? What constitutes meaningful notice? What do you do to satisfy UA? - Annual Notice - Newsletters - Message on Paystub - Videos - Posters - New Hire Package Do you allow all employees to contribute? What record is kept of communications?

Who is eligible to contribute to the 403b(b) plan? April 19, 2018 Who is eligible to contribute to the 403b(b) plan? All employees must be permitted to contribute to the 403(b) plan, except for: Employees participating in a 457(b), 401(k) or another 403(b) plan; Non-resident aliens; Work study employees; Employees who normally work less than 20 hours a week This category is difficult to prove and can generate IRS compliance issues, so it is recommended that you allow ALL employees to contribute.

What constitutes meaningful notice? April 19, 2018 What constitutes meaningful notice? As outlines by the IRS, meaningful notice must notify employees of: Their right to make elective deferrals When and how to make an election When and how often during the year they can change that election

What questions should your UA notice answer? April 19, 2018 What questions should your UA notice answer? The employer’s UA notice should answer some basic questions that an employee may ask, such as: Do we have a 403(b) plan and can I participate? Why should I contribute? How do I contribute? How or when can I take my money from the plan?

What do you do to satisfy Universal Availability (UA)? April 19, 2018 What do you do to satisfy Universal Availability (UA)? Examples of communications that can be distributed to employees to satisfy UA: New Hire Packet Annual Notice Message on Paystub Posters Newsletters Videos What records are kept of these communications? Your TPA should be assisting you with providing UA notices

2019 Maximum Allowable Contributions April 19, 2018 2019 Maximum Allowable Contributions 403(b) Limits Base Limit ($18,500) Age-based Catch up/age 50 and over ($24,500) 15 year Catch up (+$3k, review lifetime average) “W-2 Forever” Written request from participant to utilize catch-up Non-Elective limit ($55,000) Overall combined limit ($55,000 age 49 & below and $61,000/over age 50) Are YTD contributions updated to account for returned funds? 2018 2019

Loans Who is approving loans? Are loan approvals aggregated? April 19, 2018 Loans Who is approving loans? Are loan approvals aggregated? Approval amounts (50%/50k)

Hardships/457 Unforeseeable Emergency (UE) April 19, 2018 Hardships/457 Unforeseeable Emergency (UE) Who is approving hardships and/or UEs? Is approval issued in accordance with IRS-defined hardship and UE circumstances? Are you requiring and retaining supporting documentation?

Penalties/Repercussions for Plan Failures April 19, 2018 Penalties/Repercussions for Plan Failures Full Disqualification of the plan (hypothetical) Double taxation of contributions in excess of limits Restorative payments for UA violations & failure to withhold

Are you prepared for an IRS Audit? April 19, 2018 Are you prepared for an IRS Audit? Is self administration worth the risk? What experience does your TPA have with IRS Audits? To what extent would your TPA support an audit? Will they only provide copies of supporting documentation? Will they send a representative to meet with the IRS on your behalf? If so, how qualified is the person they will send?

Thank You! For more information contact: Mark Buckley April 19, 2018 Thank You! For more information contact: Mark Buckley Director of Business Development 877.544.6664 x170 mbuckley@omni403b.com