Tips for Audits Related to Aggregation of 403(b) Plans

The IRS says that issues can arise during examinations of 403(b) plans maintained by governmental and tax-exempt healthcare entities and colleges/universities. This, it says, is because many university professors and medical doctors maintain practices outside of the entity that is the general 403(b) plan sponsor. 

The IRS offers a variety of tips relevant to audits in the context of aggregation of 403(b) plans. 

• Review the plan documents and summary plan description to determine the types of contributions provided under the plan.
• Review the plan language for compliance with Section 415(c).
• Review the employer’s internal controls to determine the employer’s policy regarding outside employment. If outside employment is not permitted, the agent may consider plan aggregation a low audit risk. 
• If the employer is silent about—or permits—outside employment, determine the procedures used to inform employees about the aggregation rule, and review any notices, forms or other written communications containing that information.
• Review any information employees must provide to the employer regarding outside employment and plan contributions.