New IRS Form Mandates Governance Disclosures for Non Profits - What About Pensions?
Little noticed inside the pension community is a provision of the Pension Protection Act of 2006 that directly impacts reporting by tax-exempt organizations. What's interesting is that required changes mandate important governance disclosures for churches and foundations and other non-profits. According to Guidestar.org, "Form 990-T was considered a tax return and was not open to public inspection. The Pension Protection Act of 2006, however, mandates that any IRS Form 990-T filed by a 501(c)(3) organization after August 17, 2006, is now a public document. The exception is a Form 990-T filed solely to request a refund of the telephone excise tax."
Too bad the same disclosures are out of reach for anyone interested in understanding the nature of fiduciary risk attached to pension plans. As we pointed out in "Searching for Hidden Treasure" (April 17, 2006), even seemingly "mundane" information such as who makes primary decisions about defined benefit and defined contribution plans is often out of reach. As I wrote then, other than the names of the plan sponsor and plan administrator (found on Form 5500), no one knows much about who is in charge. (Some databases provide this information for a fee and various plan sponsors voluntarily provide this information online or in writing.)
Wouldn't it be grand to know more about who is making critical decisions regarding the $10 trillion pension industry? After all, how can we reward "good players" and hold "bad" or "careless" fiduciaries accountable if they operate in the shadows?
At a time when the SEC is asking for additional information (executive compensation decisions, audit committees, etc) and FASB wants to know more (having just announced plans to promote pension investment risk disclosure) where is the upset about pension fiduciaries - who they are, how they are selected and whether they are qualified for the tasks put upon them?
Editor's Note:
Part III questions of the newly revised form 990 are shown below. The IRS website provides detailed instructions and commentary.
- Enter the number of members of the governing body
- Did the organization make any significant changes to its organizing or governing documents?
- Does the organization have a written conflict of interest policy?
- Does the organization have a written whistleblower policy?
- Does the organization contemporaneously document the meetings of the governing body and related committees through the preparation of minutes or other similar documentation?
- Enter the number of independent members of the governing body
- If “Yes,” how many transactions did the organization review under this policy and related
procedures during the year? - Does the organization have a written document retention and destruction policy?
- Does the organization have local chapters, branches or affiliates?
- If yes, does the organization have written policies and procedures governing the activities of such chapters, affiliates and branches to ensure their operations are consistent with the organization’s?
- Does an officer, director, trustee, employee or volunteer prepare the organization’s financial statements?
- Does the organization have an audit committee?
- How do you make the following available to the public?
