Current through Register Vol. 46, No. 39, September 25, 2024
The board, with respect to the State plan, and the deferred
compensation committee, with respect to any other plan, shall be responsible
for causing such plan to be in compliance with this section for each plan
year.
(a) Subject to subdivision (c)
of this section, a plan shall be subject to this subdivision for a plan year if
the plan has fewer than 100 participants as of the last day of the plan year.
If a plan is subject to this subdivision for a plan year, the deferred
compensation committee shall:
(1) prepare, or
cause to be prepared, for the plan year an unaudited financial statement of the
net assets available for benefits and the related statements of changes in net
assets available for benefits for the plan year-end; and
(2) engage, or cause to be engaged, in
accordance with the requirements of Part 9003 of this Title, a certified public
accountant to conduct a review of the plan's activities during the plan year
and to produce an agreed-upon procedures report for the plan year, which report
shall specify the procedures and the results of the procedures by such firm of
certified public accountants in the review of each of the following items (and
any other additional items as may be required by the deferred compensation
committee for the plan):
(i) whether
participant account balances, by investment option and in the aggregate as of
the plan-year end, as reported by the administrative service agency for the
plan, agree to the value of the assets held by the trustee of the plan by
investment option and in the aggregate as of plan-year end;
(ii) whether participant deferrals reported
by the plan sponsor, by individual participant and in the aggregate, for the
plan year agree with the deferrals received by the trustee of the plan for the
plan year;
(iii) whether
participant deferrals for the plan year were properly authorized and accurately
remitted to the trustee of the plan in accordance with the timing and other
requirements of the plan document (or industry practice if no direction is
provided in the plan document);
(iv) whether the plan properly and separately
accounted for pre-tax and, if applicable, designated Roth contributions
deferred or contributed for the plan year;
(v) whether maximum contribution limitations
and minimum required distribution requirements were properly implemented for
the plan year;
(vi) whether
participant requests for lump sum and installment benefit distributions for the
plan year were properly authorized and processed in accordance with the plan
document and contractual provisions (or industry practice, if no direction is
provided in the plan document or applicable contracts);
(vii) whether participant requests for
unforeseeable emergency withdrawals during the plan year were processed
according to written procedures, properly authorized and properly
documented;
(viii) whether
participant requests for plan loans during the plan year were processed
according to written procedures and were properly authorized and
documented;
(ix) whether
participant requests for deferral amount changes and asset allocation changes
for the plan year were processed accurately and in a timely manner in
accordance with the plan document and applicable contract provisions (or
industry practice, if no direction is provided in the plan document or
applicable contracts);
(x) whether
all plan-level and participant-level fees for the plan year were disclosed to
participants, were allocated in accordance with written procedures and on a
uniform basis and were assessed solely to support operations of the plan;
and
(xi) whether, for the plan
year, employees who were eligible during that plan year to elect to participate
in the plan were provided with written notification of the plan and enrollment
opportunities.
(3) The
specific procedures and methods applied to each item covered by paragraph (2)
of this subdivision shall be determined in the professional judgment of the
certified public accountant in accordance with generally accepted industry
standards in conjunction with the deferred compensation committee for the plan
prior to the firm's performance of the agreed-upon procedures on the
plan.
(b) A plan shall
be subject to this subdivision for a plan year if it is the State plan or,
subject to subdivision (c) of this section, if the plan has 100 or more
participants as of the last day of the plan year. If a plan is subject to this
subdivision for a plan year, the board or deferred compensation committee, as
applicable, shall:
(1) prepare, or cause to
be prepared, a financial statement of the net assets available for benefits and
the related statements of changes in net assets available for benefits for the
plan year-end, which statements shall be prepared in accordance with
Governmental Accounting Standards Board Statement 32, "Accounting and Financial
Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans",
or any successor statement thereto; and
(2) engage, or cause to be engaged, in
accordance with the requirements of Part 9003 of this Title, a certified public
accountant to conduct an audit of the financial statements described in
paragraph (1) of this subdivision in accordance with auditing standards
generally accepted in the United States of America.
(c) The following rules shall apply to plans
that would otherwise become subject to subdivision (a) or (b) of this section
(or cease to be subject to subdivision [a] or [b] of this section) from one
plan year to the next succeeding plan year as a result of an increase or
decrease in the number of participants in the plan.
(1) A plan that:
(i) was subject to subdivision (a) of this
section for a prior plan year and that has complied with the requirements set
forth in subdivision (a) of this section for that plan year; and
(ii) becomes subject to subdivision (b) of
this section for the current plan year by virtue of having 100 or more
participants as of the last day of the current year, may elect to comply with
the provisions of subdivision (a) of this section for such current plan year,
and, if such election is made, shall not be subject to the requirements of
subdivision (b) of this section for the current year.
(2) A plan that:
(i) was subject to subdivision (b) of this
section for a prior plan year; and
(ii) would be subject, but for the operation
of this paragraph, to subdivision (a) of this section for the current plan year
by virtue of having fewer than 100 participants as of the last day of the
current plan year, shall be required to continue to comply with the provisions
of subdivision (b) of this section for such current plan year and shall not
become eligible to utilize the procedures in subdivision (a) of this
section.
(3) Example:
Plan X has 90 participants as of the last day of Plan Year 1, and accordingly,
the deferred compensation committee of Plan X causes the plan to comply with
the financial statement and agreed-upon procedures requirements described in
subdivision (a) of this section with respect to Plan Year 1. On the last day of
Plan Year 2, Plan X has 110 participants. Plan X may elect to continue to
comply with the provisions of subdivision (a) of this section and will not be
subject to the audit requirements of subdivision (b) of this section for Plan
Year 2.
(4) Example. Plan Y has 110
participants as of the last day of Plan Year 1, and accordingly, the deferred
compensation committee of Plan Y causes the plan to comply with the financial
statement and audit requirements described in subdivision (b) of this section
with respect to Plan Year 1. On the last day of Plan Year 2, Plan Y has 90
participants. Plan Y must continue to comply with the provisions of subdivision
(b) of this section and will not be permitted to rely on the agreed-upon
procedures provisions of subdivision (a) of this section for Plan Year
2.
(d) The deferred
compensation committee for a plan subject to subdivision (a) of this section
for a given plan year may elect to comply with the requirements of subdivision
(b) of this section for such plan year.
(e) For purposes of this section, participant
means any person who, as of the last day of a plan year, has an account balance
under the plan that is greater than zero.
(f) The agreed-upon procedures requirement
described in paragraph (a)(2) of this section and the audit requirement
described in paragraph (b)(2) of this section shall be completed by no later
than six months following the end of the plan year to which such agreed-upon
procedures or audit relates. Provided, however, for a plan year that ended on
or after December 31, 2010 and before December 31, 2011, the agreed-upon
procedures or audit relating to such plan year shall be completed by no later
than 12 months following the end of such plan year.
(g) The board or deferred compensation
committee, as applicable, for a plan shall adopt and communicate to plan
participants written procedures whereby a plan participant may request in
writing or electronically to receive the financial statements and agreed-upon
procedures report described in paragraph (a)(2) of this section and the audited
financial statements and accompanying auditors report described in paragraph
(b)(2) of this section at no cost to the participant other than a reasonable
charge for copying and postage. The board or deferred compensation committee,
as applicable, will be deemed to have satisfied the requirements of this
subdivision if participants:
(1) are able to
obtain the applicable reports and financial statements for the plan;
or
(2) are directed to a web site
associated with the plan or the State or local employer sponsor of the plan
that contains such information in a readily readable and downloadable
format.
(h) The board or
deferred compensation committee, as applicable, shall file with the president a
complete and accurate copy of the financial statements and agreed-upon
procedures report described in paragraph (a)(2) of this section or the audited
financial statements and accompanying auditors report described in paragraph
(b)(2) of this section promptly following delivery of such statements and
reports to the board or deferred compensation committee, as
applicable.
(i) The provisions of
this section shall be in effect for each plan year of a plan ending on or after
December 31, 2010.
