1. 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

2. 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”

3. 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

4. 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.

5. 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?

6. 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

7. 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?

8. 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?

9. 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.

10. 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

11. 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?

12. 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

13. 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

14. 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)

15. 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?

16. 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

17. 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?

18. Thank You! For more information contact: Mark Buckley
April 19, 2018
Thank You!
For more information contact:
Mark Buckley
Director of Business Development
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