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Nonprofit Advisor L

UHY Advisors Mid-Atlantic, Inc.

September 2008
Vol. 1 • No. 6

6851 Oak Hall Lane Suite 300 Columbia, MD 21045 410-720-5220 Fax 410-381-2524

Charitable Registrations 403(b) Plans

Consider These Tips to Avoid Rejection Why you need to start
preparing now
By Carol Shepherd, Senior Staff
By Robert M. Gonzales, Principal

D o you work at a nonprofit that

solicits charitable contributions?
Is your nonprofit registered as a char-
4. Don’t register too early. Although
timely filing is good, there are a few
states that don’t want to receive I n the June 2008 edition of this
newsletter, we told you that if
itable organization with one, or all, of your registration too early. An your organization sponsors a retire-
the 50 states? If so, take note of the example of this situation is Arizona, ment plan under Internal Revenue
following list when you spend valu- which requires charitable filings to Code section 403(b), and the plan is
able time filling out charitable regis- be sent in September. If it arrives covered under the Employee
tration forms because the last thing too early, they’ll send it right back. Retirement Income Security Act of
you want is for them to be rejected. 5. Use the URS ... but not always. The 1974 (ERISA), you must comply
URS is a great way to file; it’s quick, with new rules soon.
Some points to consider:
and it’s easy. Even if the state you In case you missed that article, on
1. Make sure it’s signed! This point are filing with is listed on this web- Nov. 16, 2007, the U.S. Department
applies to the audit report, the site:, you of Labor (DOL) issued new regula-
990, the registration form and/or still want to double check to make tions on 403(b) plans that eliminate
Unified Registration Statement sure the state accepts the URS. A their exemption from the annual
(URS.) This is a simple step to for- few states are listed on this website Form 5500 reporting, disclosure and
get and yet so easy to include. but still prefer their own forms. audit requirements under ERISA.
2. Do you need a registered agent? 6. Do you need an addendum to the ERISA-covered 403(b) plans are now
Some states require a registered URS? Don’t forget to check online subject to the same reporting and
agent for process serving. Some to see if your state requires one. You audit requirements as 401(k) plans.
states that require registered can check by going to this website: Generally speaking, sponsors with
agents include California, Michi- 100 or more employees eligible to
gan, North Dakota, Utah and rms.htm. West Virginia is an exam- continued on page 2
Washington D.C. Check in each ple of a state that requires supple-
year with the state with which you mentary information and will,
are registering for updates, as this indeed, send the URS back to you if PREFER TO GET YOUR
information can change. the supplementary information is NEWS DIGITALLY?
not included in your filing.
3. Send the proper form at the Sign up to receive our news-
proper time. Sounds simple, 7. Send in the appropriate attach- letter through email. Just email
right? There are states that require ments. There are states, such as Kathy at
multiple filings at different times Missouri, that require obscure to let her know that’s what
of the year. Sending in the wrong attachments such as examples of you’d like, and she’ll take care of
form at the wrong time is a sure solicitation materials (e.g. tele- the rest.
way to get rejected. continued on page 2

UHY Advisors brings specialists in nonprofit solutions in accounting and tax.

September 2008
Vol. 1 • No. 6

Charitable Registrations being rejected, but it might cost ing with is expecting money, they
continued from page 1 you. If you file late, there may be will send your filing back if a check
penalties involved. If your fiscal does not accompany the forms.
phone transcripts) that have been year end does not come at a time to So take a few extra minutes and fol-
used to raise funds. This can be make it convenient to file timely, low these pointers; they should help
easy to overlook since most states most states will allow an extension. increase your efficiency and keep
do not require this type of attach-
9. Pay the fee. Most states require a you in compliance with the states.
ment. Pay attention.
fee of some sort: some as little as Or, if you want assistance with
8. Remember to extend. This may $10, and others can be several hun- your filings, call us and we’ll be
not result in your registration filing dred dollars. If the state you are fil- happy to help.

403(b) Plans plying with the new audit require- with the new IRS rules. Sponsors will
continued from page 1 ment. In some cases, vendors may not also need to know the number of par-
be able to provide the required infor- ticipants in the plan, the location of
participate in their plan will be mation in a timely manner or, per- all plan assets and the number and
required to have their plan audited haps, not at all. Further, during the identity of vendors serving the plan.
and to attach the audit opinion to course of auditing a plan, auditors
the plan’s Form 5500 filing. may become aware of deficiencies or If the plan is subject to audit require-
material weaknesses in the design or ments, sponsors will need to generate
React now! operation of the plan’s internal con- comparative financial statements in
trol. Under new auditing standards, accordance with Generally Accepted
You may know that the 2009 Form
auditors are required to report defi- Accounting Principals as well as gath-
5500 filings are not due until the end
ciencies and material weaknesses in er the information necessary to have
of July 2010 (extendable to October
internal controls to the plan’s govern- an audit performed by an independ-
15th of the same year). What you
ing board, which, in most cases is the ent certified public accountant in
may not know is that ERISA
sponsor’s governing board. accordance with Generally Accepted
requires the audited financial state-
Auditing Standards. Sponsors will
ments and the Form 5500 to be com- The Department of Labor publicly also want to determine the adequacy
parative. Therefore, sponsors will stated that it will not be sympathetic of the plan’s internal controls.
need to include 2008 financial infor- to non-filers and late filers under the
mation in their 2009 filings. The fact new 403(b) regulations. Plan admin- UHY can help
that we are in the third quarter of istrators who fail or refuse to comply
2008 does not make this any easier. with ERISA requirements may face We can assist you in determining
civil penalties of up to $1,100 per day which of the new reporting require-
Most 403(b) plans are comprised of ments apply, in gathering pertinent
individual contracts issued to for each report. Likewise, the IRS
may assess penalties of $25 per day data from service provider(s), and in
employees by many different vendors preparing financial statements and
over the plan’s life. Some plans have (up to $15,000) for failure to timely
file returns for plans. disclosures. We can also help compile
numerous vendors in any given plan financial statements as of the begin-
year. Unlike 401(k) plans, many
403(b) plans do not have centralized
Immediate action steps ning of the year, and evaluate internal
control environment, including finan-
plan administration or recordkeep- Initially, plan sponsors should name cial reporting controls, prior to audit.
ing. Consequently, a great deal of a point person or committee to deter-
effort, and cost, will be required by mine whether its 403(b) plan is sub- Just don’t wait to the last minute to
plan sponsors to gather the 2008 and ject to ERISA. Even if the plan is not get ready. Start preparing now, or it
2009 information necessary for com- subject to ERISA, it must comply will be too late before you know it.

The statements contained herein are provided for informational purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal,
state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. Furthermore, such statements are not presented or intended as, and should not be taken
or assumed to constitute legal advice of any nature, for which advice it is recommended that you consult your own legal counselors or professionals.
UHY Advisors, Inc., provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of “UHY Advisors.” UHY Advisors, Inc.,
and its subsidiary entities offer services from offices across the United States. UHY Advisors, Inc., and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent
CPA firm that performs attest services. UHY Advisors, Inc., and UHY LLP are independent U.S. members of Urbach Hacker Young International Limited.