5 Top IRS Concerns for Higher Ed 403(b) Compliance

Thompson's HR Compliance Expert site recently analyzed a Higher Education compliance program that the IRS began in 2011. The top five concerns the IRS have are as follows:

(1) having plans with “conditioned eligibility,” which is not allowed;

(2) reviewing the required hours of service for eligibility;

(3) having an up-to-date plan document;

(4) emphasizing the annual communication requirement to begin or change regular and Roth 403(b) elective deferrals; and 

(5) discussing the importance of communicating and describing eligibility terms to participants.

Author, Gwen Cofield adds, "In separate research, the agency determined that 16 percent of public kindergarten through 12th grade schools/school districts may have violated 403(b) universal availability requirements."

The article, Higher Ed Needs More Schooling on 403(b) Rules; Nearly 40% Failed Compliance Test, Says IRS explains the Higher Ed compliance program, provides additional detail and gives a short overview of a similar K-12 program.

Scott Dauenhauer, CFP, MPAS, AIF