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Charter School 403(b)s and Forms 5500

Q: We have two 403(b) plans for a charter school that we have been treating as ERISA plans because they have employer matching contributions and we thought the school was considered to be a 501(c)(3) tax-exempt organization. However, it looks like the charter school would qualify as a public school, which would make it exempt from ERISA. Since the plans have already been operating as ERISA plans, is it possible to stop now or do they have to continue filing Forms 5500 and performing ACP testing? If they can stop, would you file a “final” 5500?

A: First, you should work with your attorney to verify your status as a public school and what your state may require for charter school 403(b) plans — some states have additional hurdles that could prove costly later if not navigated properly now. If your plans are, in fact, governmental plans, they won’t be subject to ERISA, so testing and filing Forms 5500 could stop. You could then send a letter to the DOL informing them of your realization (or you could even wait for DOL to ask where your Forms 5500 are). And you probably want to get off of the old document and go to a new, K-12 document.

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