How do you audit a 403(b) in-kind distribution? There is no financial transaction, no cash changes hands, there is no change in investments. It really is only a nominal change in the records of the insurer. Yet, somehow, GAAP requires that the “transaction” be verified. There is no answer, yet, to this question, which means the industries (that is, auditors, insurers, and lawyers) will be pressed for finding a standardized approach for bringing audit certainty to this process. It even becomes a bigger issue than 403(b)s: QLACs and other distributed annuity contracts are all able to be distributed as “in-kind” distributions from 401(a) plans as well, and there is no acceptable “recordkeeping” method to audit.
Continue Reading Auditing Distributed 403(b) (and 401(a)) Contracts
403(b) audit
Rome was not built in a day… build internal controls one step at a time
By Conni Toth on
Posted in 403(b)
After many years of wading through a variety of retirement plan platforms and services, I can honestly say “I will never stop being fascinated”. I do believe, with 100% certainty, that I will never be able to anticipate every possible compliance issue. However, with as much certainty, I can say “processes, procedures and effective internal controls are vital to avoiding possible compliance gaps and hiccups and maintain a successful retirement plan.”
The IRS recognizes that gaps and hiccups will arise when comparing FORM, the plan document & design, to the plan’s operations, administrative processes and procedural activities. The IRS provides guidance for plan sponsors to self-correct with the understanding that it isn’t as simple as just finding the gap or hiccup. The IRS expects the plan sponsor to take three steps when gaps or hiccups arise…
Continue Reading Rome was not built in a day… build internal controls one step at a time
The Rubber Finally Hits the Road: The AICPA 403(b) FAQ Confirms Our Fears
By Robert Toth on
Posted in 403(b)
The independent auditor is really at the heart of the growing storm in the 403(b) world. For all the problems and challenges caused by the tax regulations, they really pale when compared to what has to happen on the ERISA Title 1 side of things as employers and the market attempt to transform to an…
CPA Group Struggles With 403(b) Rules
By Robert Toth on
Posted in 403(b)
BNA reported on August 20th the concerns of the AICPA’s 403(b) Plan Audit Task Force about practitioners "misunderstanding" of the impact of the recently issued DOL FAB 2009-2, where the DOL took steps to alleviate some of the more draconian impacts of the new Form 5500 reporting rules for certain 403(b) plans.
Task force members are reported…