Form 15417-C – 403(b) Worksheet 5B Coverage and Nondiscrimination Test

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When a 403(b) plan makes employer contributions other than matching, coverage and nondiscrimination still have to be tested, and Form 15417-C is the worksheet that does it. It is IRS Worksheet 5B (Rev. 4-2023, Catalog Number 94031D), used in examination to check those non-matching employer contributions, not a taxpayer filing.

A reviewer answers each item Yes, No, or N/A across seven sections, I through VII, records a Plan Reference for every answer, and explains every No. Matching and after-tax employee contributions are tested separately on Worksheet 11A. There is a real skip rule worth knowing up front: a state or local governmental plan under IRC 414(d), or a church or QCCO under IRC 3121(w)(3), skips the rest of the worksheet. Section VII allows post-severance nonelective contributions for a former participant only until the earlier of death or five years after the separation year.

Key Takeaways

• Form 15417-C is IRS Worksheet 5B, used to determine whether a 403(b) plan’s employer contributions other than matching satisfy coverage and nondiscrimination requirements. It is an IRS examination worksheet, not a taxpayer filing, so there is no portal or email channel; a reviewer completes it during a 403(b) plan review and records a Plan Reference for every answer.
• Record a Plan Reference for every answer and explain every No in the space that follows each section. All items must be completed as Yes, No, or N/A.
• Worksheet 5B covers employer contributions other than matching. Matching and after-tax employee contributions are tested separately on Worksheet 11A.
• The worksheet is tax-year-neutral with no deadlines or dollar figures; its only year-sensitive input is the Social Security taxable wage base used in the Section IV permitted disparity test.
• Section VII allows post-severance employer nonelective contributions for a former participant only until the earlier of death or five years after the end of the separation year, with no option for the former employee to take the money in cash.

What Form 15417-C Does

At its core, Form 15417-C is a simple idea. It is an IRS examination worksheet a reviewer uses to test whether a 403(b) plan’s employer contributions other than matching satisfy coverage and nondiscrimination requirements. A reviewer answers each item Yes, No, or N/A across seven numbered sections (I through VII), and a state or local governmental plan under IRC 414(d) or a church or QCCO under IRC 3121(w)(3) skips the rest of the worksheet. A “Yes” answer signals a favorable conclusion, a “No” answer signals a problem to explain, and “N/A” means the item does not apply to the plan.

When the worksheet applies, every line item wants a Plan Reference that points to where in the plan document the provision lives. Section II(a) fail-safe language is optional: no fail-safe language means N/A, inadequate language means No, and adequate language means Yes.

Where Worksheet 5B Fits In a 403(b) Review

Worksheet 5B is one piece of the IRS 403(b) examination worksheet series. It handles employer contributions other than matching, while matching and after-tax employee contributions are routed to Worksheet 11A, and includible compensation rules for former participants are cross-checked against Worksheet 6A.

• Start at Section I to confirm the worksheet even applies. A state or local governmental plan under IRC 414(d), or a church or QCCO under IRC 3121(w)(3), skips the rest.
• If the plan provides employer contributions other than matching, continue through Sections II through VII.
• Move matching and after-tax employee contributions to Worksheet 11A.
• For former-participant contributions, verify includible compensation against the method in Worksheet 6A.

Why This Matters

Small misreads create big cleanup. Treating the worksheet as a return sends teams chasing a deadline that does not exist. Marking a missing fail-safe provision as a No, instead of N/A, manufactures a problem the plan does not have. Designing a permitted disparity formula above the 2-to-1 cap quietly breaks the safe harbor. The worksheet itself disclaims permanence, noting that its technical principles may be changed by future regulations or guidance, so a clean read against the current plan document keeps the review grounded.

Quick Reality Check

• Form 15417-C is an examination worksheet, not a taxpayer filing. There is no portal, no email channel, and no submission address.
• It covers employer contributions other than matching. Matching and after-tax employee contributions go to Worksheet 11A.
• It is tax-year-neutral. The only year-sensitive input is the Social Security taxable wage base used in the Section IV permitted disparity test.

In the next section, you will see who actually completes the worksheet and at what point in a 403(b) review, plus how the seven sections fit together.

Who Completes It and When

Form 15417-C is not filed by anyone and has no who-must-file population. It is an internal IRS examination worksheet (Worksheet 5B) a reviewer completes during a 403(b) plan review of employer contributions other than matching. In practice, plan sponsors, third-party administrators, and benefits consultants use the same worksheet to self-check plan language before an examiner ever asks.

The Order of Operations

• Confirm applicability in Section I, then stop if a skip rule applies.
• Work Sections II through VI in order for a plan that provides employer contributions other than matching.
• Complete Section VII only if the plan makes post-severance employer nonelective contributions for former participants.

There Are No Deadlines To Plan Around

This is a structural compliance worksheet with Yes, No, and N/A checkboxes, not a return with a due date. It carries no filing deadlines, no dollar thresholds, and no tax-year-specific figures.

The One Year-Sensitive Input

• The Section IV permitted disparity test references the Social Security taxable wage base in effect at the beginning of the plan year. That figure is set by other authorities and changes each year, but the worksheet itself does not.

Because the worksheet is tax-year-neutral, the current revision (April 2023) applies across plan years; you simply use the wage base that applies to the plan year under review.

Why People Mistake It For a Filing

• The label "Form 15417-C" reads like a return, but the PDF is titled Worksheet 5B and has no signature block, filing line, or submission address.

Read it as a documentation review of the plan document, not as something the plan files.

What a Reviewer Records on Every Line

Every line item has a Plan Reference column. The reviewer cites where in the plan document the provision appears, then answers Yes, No, or N/A. A Yes generally signals a favorable conclusion, a No signals a problem that must be explained, and N/A means the item does not apply to the plan.

Common Triggers That Change the Path

• A governmental or church/QCCO status flips Section I to a full skip.
• A plan with no employer contributions other than matching means Worksheet 5B does not apply at all.
• A plan that makes post-severance contributions for former participants pulls Section VII into scope.

Quick Section Map

Section	Subject	Key check
I	Applicability	Governmental, church, or QCCO status; does the plan provide non-matching employer contributions?
II	Coverage	Optional 410(b) fail-safe provision, adequate or not
III	Matching and after-tax contributions	Route to Worksheet 11A
IV	Employer contributions other than matching	Uniform allocation safe harbor or permitted disparity
V	Nondiscriminatory compensation	IRC 414(s) for computing and for testing
VI	Benefits, Rights, and Features	Nondiscriminatory, not tied to deferrals
VII	Former participants	Post-severance contribution limits

Up next, the applicability and skip rules in Section I, where most reviews either stop early or commit to the full worksheet.

Section I: Applicability and Skip Rules

Section I decides whether the rest of the worksheet runs at all. Get this wrong and you either skip a plan that should be tested or grind through a worksheet that does not apply.

The Two Skip Paths

A governmental plan under IRC 414(d) that is maintained by a State or local government, or a political subdivision, agency, or instrumentality, skips the rest of the worksheet. The skip text reaches state and local plans only, not federal-government plans.

A church under IRC 3121(w)(3)(A) or a qualified church-controlled organization (QCCO) under IRC 3121(w)(3)(B) also skips the rest. A church-affiliated employer that is not a QCCO must continue the worksheet.

Section I Screening Steps

• Confirm governmental status under IRC 414(d); a state or local plan stops here.
• Confirm church or QCCO status under IRC 3121(w)(3); a church or QCCO stops here.
• Continue for a non-QCCO church-affiliated organization.
• Confirm the plan provides employer contributions other than matching; if it does not, Worksheet 5B does not apply.
• Record a Plan Reference for every Section I answer.

What Belongs on Worksheet 11A Instead

If the plan offers matching or after-tax employee contributions, those are tested on Worksheet 11A, which Section III references. Worksheet 5B stays focused on employer contributions other than matching, so split the testing rather than running matching contributions through Section IV.

Section II: Coverage and the Fail-Safe Provision

Section II addresses the minimum coverage requirement of IRC 410(b) for contributions other than elective deferrals. The most common misread here is treating a fail-safe provision as mandatory.

The Three Outcomes for Fail-Safe Language

• Adequate fail-safe language is a Yes.
• Inadequate fail-safe language is a No.
• No fail-safe language at all is N/A, because the provision is optional.

If the plan uses a fail-safe provision, it must state exactly how testing is done and how correction is implemented, with no discretion left to the employer. It must also fix participants' rights as of the last day of the relevant plan year, with no other plan provision able to override or take those rights away.

Why the Distinction Matters

• Marking an absent fail-safe as No manufactures a coverage problem that does not exist.
• A fail-safe that leaves correction mechanics to employer judgment is not self-executing, so it earns a No even though language is present.

Document the fail-safe status as adequate, inadequate, or absent, with a Plan Reference, so the Section II answers are never guesses.

Sections III and IV: Contribution Testing

Section III is short: if the plan offers matching or after-tax employee contributions, complete Worksheet 11A for those. Section IV is where Worksheet 5B does its real work on employer contributions other than matching.

• Section IV(a) asks whether the contribution formula satisfies the design-based uniform allocation safe harbor.
• If the formula uses permitted disparity, complete Section IV(b) before moving on.
• If it does not satisfy the uniform allocation safe harbor, the worksheet routes the reviewer to Section IV(c) for the alternative path.

A plan that fails the uniform allocation safe harbor is not automatically discriminatory. It can still satisfy nondiscrimination through permitted disparity or general testing, so do not stop at a single No.

Quick Contribution Routing Check

• Matching and after-tax employee contributions to Worksheet 11A.
• Employer nonelective contributions stay on Worksheet 5B.
• Uniform allocation safe harbor is the simplest path; permitted disparity needs the Section IV(b) sub-tests.

Permitted Disparity, What Controls the Safe Harbor

Section IV(b) sets out the permitted disparity rules under IRC 401(l). It is a set of separate tests, and clearing one does not clear the others.

The Section IV(b) Sub-Tests

• The integration level must be a uniform dollar amount not in excess of the taxable wage base in effect at the beginning of the plan year.
• The base contribution percentage and the excess contribution percentage must be the same for all participants.
• The excess contribution percentage cannot be greater than twice the base contribution percentage.
• The difference between the excess and base percentages cannot exceed the maximum permitted disparity under IRC 401(l).
• The plan must provide that both the overall and the cumulative permitted disparity limits will not be exceeded.

The Two Tests People Conflate

The 2-to-1 cap on the excess-to-base ratio and the maximum percentage-point disparity are distinct. A formula can pass the 2-to-1 ratio and still exceed the maximum permitted disparity, so run both before signing off.

Avoidable Permitted Disparity Errors

• Setting the integration level above the Social Security taxable wage base.
• Using different base or excess percentages across participant groups.
• Designing an excess-to-base ratio greater than 2-to-1, which breaks the safe harbor.

Section V: 414(s) Compensation

Section V asks the IRC 414(s) compensation question twice, and both must be satisfied. A non-414(s) compensation definition breaks the safe harbor even when every other element is correct.

Two Separate 414(s) Checks

• If the plan uses a design-based safe harbor allocation formula, the compensation definition used for computing contributions must satisfy IRC 414(s).
• The compensation definition used for nondiscrimination testing must also satisfy IRC 414(s).

These are tested independently, so confirm the plan document supports both uses with a Plan Reference for each answer.

Section VI: Benefits, Rights, and Features

Benefits, Rights, and Features (BRFs) are tested separately from contribution nondiscrimination. A plan with perfectly nondiscriminatory contributions can still fail because its BRFs are discriminatory.

The Two BRF Questions

• Are the BRFs available in a nondiscriminatory manner?
• Are all BRFs free of any condition tied to the participant making, or failing to make, elective deferrals?

The Common BRF Drafting Error

A BRF cannot turn on deferral behavior. The rule forbids both a "must defer to get this benefit" design and a "cannot defer to get this benefit" design, since either one conditions the feature on elective deferrals.

Section VII: Former Participant Contributions

Section VII applies only if the plan provides employer nonelective contributions on behalf of former participants. If it does not, the remainder of the worksheet is skipped.

The Five Former-Participant Checks

• Confirm the plan provides employer nonelective contributions for former participants; if not, skip the remainder.
• Confirm those contributions are made on a nondiscriminatory basis.
• Confirm the former employee has no option to take the money in cash instead of depositing it into the 403(b) account.
• Confirm includible compensation is calculated under Treasury Regulation 1.403(b)-4(d)(1), cross-checked against Worksheet 6A.
• Confirm post-severance contributions stop at the earlier of the participant's date of death or five years following the end of the year the participant left employment.

Two Easy Section VII Mistakes

• Allowing a cash-or-deferred election for former employees turns the employer contribution into a constructive elective deferral and breaks 403(b) treatment.
• Starting the five-year clock on the separation date, rather than the end of the separation year, gives the participant more time than the rule allows.

How to Read Yes, No, and N/A

All items must be completed, and the answer columns are Yes, No, and N/A. A Yes generally indicates a favorable conclusion is warranted, a No indicates a problem exists, and N/A means the item does not apply to the plan. Every No must be explained in the space that follows that part of the worksheet, and every line carries a Plan Reference. The worksheet also notes that its technical principles may be changed by future regulations or guidance, so it summarizes current rules rather than restating permanent law.

A Practical Review Toolkit

A few standing artifacts keep a 403(b) coverage and nondiscrimination review consistent every cycle.

• A section-by-section map of plan language to Sections I through VII, so every answer carries its Plan Reference.
• A fail-safe status note for Section II(a): adequate, inadequate, or absent.
• A permitted disparity worksheet that checks the integration level, the 2-to-1 cap, and the maximum disparity under IRC 401(l).
• A former-participant tracker for the Section VII five-year window, measured from the end of each separation year.

When you keep these current, an examiner request or a self-review becomes a read-through instead of a rebuild.

Where Accountably Fits, If You Need It

If your team struggles with turnaround during peak periods, you can plug in controlled offshore capacity that works inside your systems and your templates. Accountably integrates trained staff who follow your SOPs, uses standardized workpapers, and protects review time with layered quality checks. It feels like adding a disciplined lane to your workflow, not like juggling resumes. You can keep this guide and the templates above as your playbook, and have Accountably help run it when the calendar gets crowded.

End‑To‑End Review Checklist

• Screen Section I for governmental, church, or QCCO status, and confirm the plan provides employer contributions other than matching.
• Document Section II(a) fail-safe status as adequate, inadequate, or absent.
• Route matching and after-tax employee contributions to Worksheet 11A.
• Test the Section IV contribution formula against the uniform allocation safe harbor or the permitted disparity sub-tests.
• Confirm the IRC 414(s) compensation definition for both computing contributions and testing.
• Check that BRFs are nondiscriminatory and not tied to elective deferrals.
• Review Section VII former-participant contributions, including the cash-election prohibition and the five-year window.
• Record a Plan Reference for every answer and explain every No.

Common Pitfalls, And How To Dodge Them

• Treating the worksheet as a return: read it as a documentation review of the plan, with no deadline to chase.
• Marking an absent fail-safe provision as No: an absent provision is N/A, since the fail-safe is optional.
• Designing a permitted disparity formula above the 2-to-1 cap: keep the excess percentage at or below twice the base percentage.
• Starting the post-severance clock on the separation date: anchor the five-year window to the end of the separation year.

Wrap Up

You now have a clear, repeatable way to work Form 15417-C: confirm applicability in Section I, work Sections II through VII in order, record a Plan Reference for every answer, and explain every No before the review lands. Treat Worksheet 5B as a standing checklist rather than a once-a-cycle scramble.

Save this page and keep the section map and checklists with your plan documents. The next 403(b) coverage and nondiscrimination review will feel lighter.

Small errors create big cleanup, so getting the details right shows up in faster reviews and fewer surprises when an examiner asks.

Common Mistakes We See Every Season

Worksheet 5B reads like a checklist, but the same handful of misreads drive most of the No answers my team flags on a plan compliance review.

Reusable Checklists

Drop these into your plan-review SOP so every 403(b) examination of employer contributions runs the same way twice. They are copy-paste ready and track to the section structure of Form 15417-C (Worksheet 5B).

Keep 15417-C Season From Stalling

A 403(b) nondiscrimination review rarely fails because the rules are unknown. It stalls because the plan document, the testing data, and the right worksheet do not line up when an examiner or a determination request lands. Form 15417-C runs across seven sections, from applicability through former participants, and each line wants a plan reference (per Form 15417-C, Worksheet 5B, Rev. 4-2023).

The fix is to treat Worksheet 5B as a standing checklist, not a once-a-cycle scramble. When the coverage, permitted disparity, and former-participant answers are documented before anyone asks, the review becomes a read-through instead of a rebuild.

• Keep a current map of plan language to each section, I through VII, so every answer carries its Plan Reference.
• Pre-test the Section IV(b) permitted disparity formula: integration level at or below the taxable wage base, excess no more than twice the base percentage.
• Document Section II(a) fail-safe status as adequate, inadequate, or absent, so coverage answers are never guesses.
• Track the Section VII five-year post-severance window from the end of each separation year, with the cash-election prohibition noted.
• Confirm the IRC 414(s) compensation definition holds for both computing contributions and testing.

When the bottleneck is review capacity rather than knowledge, a structured team can keep this documentation current inside your systems. That is the disciplined execution our tax and compliance services are built to support, so plan reviews stay calm and on schedule.

FAQs

Is Form 15417-C something a plan files with the IRS?

No. Form 15417-C is an internal IRS examination worksheet (Worksheet 5B), not a return. There is no portal, no email channel, and no submission address. A reviewer completes it during a 403(b) plan review by answering each item Yes, No, or N/A.

What does Worksheet 5B test?

It tests whether a 403(b) plan's employer contributions other than matching satisfy the coverage and nondiscrimination requirements. Matching and after-tax employee contributions are tested separately on Worksheet 11A.

Which plans skip the rest of the worksheet?

A state or local governmental plan under IRC 414(d) skips the rest of the worksheet, and so does a church or a qualified church-controlled organization (QCCO) under IRC 3121(w)(3). A church-affiliated employer that is not a QCCO must complete the whole worksheet.

Is a 410(b) coverage fail-safe provision required?

No. A fail-safe provision for IRC 410(b) coverage failures is optional. If the plan has no fail-safe language, the Section II(a) items are answered N/A; if the language is inadequate, the answer is No; if it is adequate, the answer is Yes.

What is the cap on a permitted disparity formula?

Under the permitted disparity safe harbor in Section IV(b), the excess contribution percentage cannot be greater than twice the base contribution percentage, the integration level cannot exceed the taxable wage base at the beginning of the plan year, and the maximum percentage-point disparity under IRC 401(l) must be respected.

Where are matching contributions tested?

On Worksheet 11A. Worksheet 5B covers employer contributions other than matching; if the plan also offers matching or after-tax employee contributions, the examiner completes Worksheet 11A for those contributions.

Does the compensation definition have to satisfy IRC 414(s)?

Yes, in two places. If the plan uses a design-based safe harbor allocation formula, the compensation definition used to compute contributions must satisfy IRC 414(s), and the definition used for nondiscrimination testing must also satisfy 414(s). They are tested separately.

When does Section VII on former participants apply?

Section VII applies only if the plan provides employer nonelective contributions on behalf of former participants. If it does not, the remainder of the worksheet is skipped.

How long can post-severance contributions continue for a former participant?

Post-severance employer nonelective contributions must stop at the earlier of the participant's date of death or five years following the end of the year in which the participant left employment. The former employee must have no option to take the money in cash.

Does every question have to be answered, and do No answers need explanation?

Yes. All items must be completed with a Yes, No, or N/A response, and every No answer must be explained in the space that follows that part of the worksheet. A Plan Reference is recorded for each answer to show where in the plan document the provision appears.