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Reporting Ex-Employee Participants With a Deferred Vested 403(b) Benefit

  1. Do you have participants who separated from service after 2007 and who have a deferred vested benefit under a 403(b) plan you sponsor? If so, do you have to report them on the Form 9855-SSA?

    The IRS says you do not. It explains that a plan sponsor is not required to report a separated participant if the participant’s deferred vested benefits are attributable to an annuity contract or custodial account that is not required to be treated as part of the 403(b) plan assets for purposes of the reporting requirements of ERISA Title I, as set forth in Department of Labor (DOL) Field Assistance Bulletin (FAB) 2009-02.

    For this exception to apply, the following conditions must be met:

    1. the contract or account would have to have been issued to a current or former employee before Jan. 1, 2009;
    2. the employer would have ceased having any obligation to make contributions (including employee salary reduction contributions), and ceased making contributions to the contract or account before Jan. 1, 2009;
    3. all of the rights and benefits under the contract or account would be legally enforceable against the issuer or custodian by the participant without any involvement by the employer; and
    4. the participant would have to be fully vested in the contract or account.