The IRS in 2011 sent a Section 403(b) compliance check questionnaire to a national sample of more than 300. The check focuses on whether 403(b) plans comply with the rules for 403(b) salary deferral contributions made by employees (i.e., pretax contributions elected by employees). Although the questionnaire was directed at higher-education organizations, most of the questions apply to any entity that maintains a 403(b) plan.
Grant Thornton has prepared a self-compliance check to enable you to determine whether your responses comply with the regulations, even if your organization isn't involved in higher education. Because the compliance check reflects IRS concerns, we believe that entities that maintain a 403(b) plan would be well-served to complete the self-compliance check and correct any areas of noncompliance. If the requirements that are the subject of the compliance check are not satisfied, the salary deferral contributions made by employees are taxable when contributed rather than when distributed from the plan.
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