Headlines about "403(b) plans"
Gathered from the web by the editors at BenefitsLink.com.
[Opinion] 401(k) Plans Work If Employer Contribution Rates Are High
Excerpt: "[G]enerous contribution rates are common among universities, according to a 2007 survey by the American Association of University Professors. About 30% of responding institutions reported a typical contribution rate of 10% and 14% contribute more. In fact, most universities have offered a successful 401(k)-style plan since the 1940s . . . ." (Jane White of Retirement Solutions)
[Guidance Overview] What You Need to Know About Average Contribution Percentage Testing for 403(b) Plans
Excerpt: "The arrival of the final 403(b) regulations has transformed many compliance issues; however, the regulations are just as noteworthy for what has not been altered. For example, 403(b)s that provide for employer matching or employee after-tax contributions have always been required to perform the Average Contribution Percentage (ACP) test. However, plan sponsors of new 403(b) plans or plan sponsors who have modified their plans to add employer matching or after-tax contributions as a result of the changing 403(b) landscape may be facing ACP testing for the first time this year." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Upcoming Compliance Deadlines for 403(b) Plans (PDF)
2 pages. Excerpt: "This bulletin is a brief reminder and overview of important new requirements for 2009 for 403(b) plans and certain applicable deadlines for a plan operating on a calendar year. Note that different effective dates may apply to certain types of plans and special exceptions apply to plans covering collectively bargained employees or ministers and to governmental and church plans." (Thompson Hine LLP)
[Guidance Overview] 403(b) Plan Compliance Checklist
2 pages. Excerpt: "Plan compliance is a key to managing a successful retirement program for the benefit of your organization and its employees. Complete this checklist to help determine if your ERISA-covered 403(b) plan is in compliance, and where your exposure may lie in the event of an audit." (Diversified Investment Advisors, Inc.)
[Guidance Overview] The Approaching 403(b) Plan Document Deadline
Excerpt: "Employers that allow employees to contribute to 403(b) plans and arrangements need to adopt a plan document by December 31, 2009 if they have not already done so. In adopting a plan document, employers that have a voluntary 403(b) plan which the employer intends to be exempt from ERISA should review the plan document and their practices to confirm the 403(b) plan is not subject to ERISA." (Dorsey & Whitney LLP)
[Guidance Overview] 403(b) Document Deadline Approaching
Excerpt: "Final Treasury Regulations issued under Internal Revenue Code ('Code') Section 403(b) generally require all 403(b) arrangements to be maintained pursuant to a written plan document. Originally required to be in place by December 31, 2008, in late 2008 the IRS extended the documentation deadline to December 31, 2009. Accordingly, employers that maintain a 403(b) plan or otherwise make such an arrangement available to their employees should confirm that their 403(b) documentation is in compliance immediately." (Seyfarth Shaw)
403(b) Prototype Likely to Allow for Vesting Schedules
Excerpt: "The Internal Revenue Service (IRS) is reportedly working on a final revenue procedure for Section 403(b) prototype plans that takes into account comments received. So said James Flannery, a tax law specialist at IRS, said at the annual conference of the American Society of Pension Professionals and Actuaries (ASPPA), according to a BNA report." (PLANADVISER)
EBSA Webcast to Address Form 5500 Issues
Excerpt: "[T]he Department of Labor's Employee Benefits Security Administration (EBSA) says that an important part of the discussion will focus on the Schedule C and the impact on 403(b) plans. The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) says it will host a free webcast November 5 to help employers, plan administrators and service providers prepare for changes to the Form 5500 and electronic filing requirement that begin with the 2009 plan year filings. According to the announcement, this third webcast will provide more details about preparing the Form 5500 and getting ready for the new electronic filing system. In addition, EBSA staff will address questions received from the public and provide practical tips for using the new ERISA Filing Acceptance System ? known as EFAST2. EFAST2 will receive only electronic filing submissions. The Web cast is scheduled for November 5 from 2:00 to 4:00 p.m. EST. Registration is required and available on a first-come, first-served basis. You can so do at http://www.dol.gov/ebsa . . . ." (planadviser)
Health Care Organizations Hire Advisers / Change Plan Designs, According to Survey
Excerpt: "The new 403(b) regulations and the recent market volatility, combined with heightened fiduciary concerns, led more health care organization retirement plan sponsors to retain a retirement plan adviser, according to a survey conducted by Diversified Investment Advisors and the American Hospital Association (AHA). A press release said three-quarters of survey respondents reported they now have a plan adviser. In addition, 21% of plan sponsors consolidated the number of vendors used in their 403(b) plans and 20% converted to a single vendor arrangement." (PLANSPONSOR.com; free registration required)
[Guidance Overview] 403(b) Plans and EFAST2
Excerpt: "This article focuses on how EFAST2 will affect the Form 5500 filing requirements for 403(b) plans. In addition, the article discusses the DOL's changes to the Form 5500 filing requirements for 403(b) plans." (SunGard Relius)
[Opinion] A Response on 403(b) Plan Fees As Addressed in Recent GAO Report
Excerpt: "On October 5, the U.S. Government Accountability Office (GAO) released a report to Congressman Charles Rangel, Chair of the House Ways and Means Committee, providing some important general discussion of plan fees, though any assessment of the report must focus on the actual scope of the analysis. The report, 'Retirement Savings: Better Information and Sponsor Guidance Could Improve Oversight and Reduce Fees for Participants,' . . . reflects primarily qualitative information, rather than quantitative information, obtained in a series of interviews of a selected group of market participants (in which this author participated) and federal and state regulators. As such, it does not quantify the actual levels of fees charged in different types of plans, for different types and sizes of employers, whether paid from participant accounts or otherwise. Nor does the report attempt to analyze the reasonability and different types or levels of fees and corresponding services." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Chart of 415, Etc., Limits Updated for News Release IR-2009-94
The chart of maximum limits subject to inflation indexing at Carol V. Calhoun's employee benefits site has now been amended to include the newly announced 2010 limits. Among other things, the chart shows limits under sections 415, 403(b), 401(k), and 457, as well as the Social Security wage base and Social Security and Medicare tax rates, for 1996-2010. (Calhoun Law Group, P.C.)
[Guidance Overview] Regulation Deadline Approaches for Section 403(b) Plan Sponsors
Excerpt: "Section 403(b) tax-sheltered annuity plans became subject to an updated and revised set of regulations effective Jan. 1, 2009. One of the requirements of the new regulations is that the plan sponsor must maintain a written plan document that satisfies the regulations' various rules and conditions[.]" (McGuireWoods LLP)
[Guidance Overview] DOL Provides Reporting Relief for 403(b) Plans (PDF)
2 pages. Excerpt: "Some 403(b) plan administrators have expressed concerns regarding the difficulty and cost involved in identifying and obtaining financial information on contracts and custodial accounts to which contributions have not been made since 2008 (pre-2009 contracts). On July 20, 2009, the DOL responded to these concerns by providing relief in Field Assistance Bulletin (FAB) 2009-02." (Prudential Pension Analyst)
[Opinion] 403(b) Theft: How Employees and Employers Get Bilked
Excerpt: "Quite simply, participants in expensive plans are losing A LOT of money. How much? How about $875,000 in some cases? Consider? If a participant invested $10,000 per year (inflation adjusted) for 40 years, earned a 9 percent return (before fees), he or she would accumulate approximately $2.4 million. If fees were along the lines of the plan I just described (2.08 percent + additional advisor fee of 1 percent), this investor would pay more than $875,000 in fees." (403bwise.com)
[Guidance Overview] Tax-Qualified Retirement Plans: Year-End Action Items and the HEART Act (PDF)
Excerpt: "[This] checklist describes potential year-end amendments and notices that may be necessary for tax-qualified retirement and savings plans. The list is not exhaustive, but is intended to provide a reminder of the general issues that may need to be reviewed and considered. Also included is information regarding the Heroes Earnings Assistance and Relief Tax Act of 2008 (the HEART Act) and its impact on qualified retirement plans. Although the HEART Act does not require plan amendments by the end of the year, its required changes should be considered now.Additionally, this LawFlash includes a reminder that 403(b) plans must update plan documents to comply with the final 403(b) regulations by December 31, 2009." (Morgan, Lewis & Bockius LLP)
[Guidance Overview] IRS Answers to Questions on Taxability of Roth Conversions
Excerpt: "In Notice 2009-75, the Internal Revenue Service provides guidance in the form of a Q&A on the tax treatment of eligible rollover distributions from qualified plans into a Roth IRA. The guidance further clarifies that a qualified plan is a qualified plan described in ? 401(a), an annuity plan described in ? 403(a), a plan described in ?403(b), or a governmental ? 457(b) plan." (PLANSPONSOR.com; free registration required)
[Official Guidance] Daniels-Hall v. National Education Association: Brief of Secretary of Labor As Amicus Curiae in Support of Defendants (PDF)
28 pages. Excerpt: "The Secretary of Labor has primary authority to interpret and enforce the fiduciary, reporting and disclosure provisions of Title I of the Employee Retirement Income Security Act of 1974 ('ERISA'), 29 U.S.C. ? 1001 et seq. She submits this brief pursuant to this Court's July 14, 2009 order inviting the Department of Labor ('Department') to file an amicus brief on a question that may be answered primarily by reference to the Secretary's regulations and interpretations of Title I of ERISA, namely: Whether, in the subject case, the National Education Association was legally capable of establishing a plan subject to Title I of ERISA offering 26 U.S.C. [Internal Revenue Code] ? 403(b) annuities." (U.S. Department of Labor)
[Guidance Overview] IRS Guidance on Accrued Leave Contributions to Qualified Retirement Plans
Excerpt: "Although the IRS guidance confirms the legitimacy of certain basic leave contribution arrangements that sophisticated employers have had in place for some time, several significant issues are left unaddressed, including the following: Would leave contributions be subject to FICA taxes? . . . . Can leave contributions be made to a section 403(b) tax-sheltered annuity plan or a government-sponsored 457(b) deferred compensation plan?" (Ballard Spahr LLP)
[Guidance Overview] Judge Rejects 403(b) 'Kickback' Suit
Excerpt: "A federal judge has dismissed a lawsuit alleging a New York state teachers group breached its fiduciary duty by paying 'kickbacks' to ING Life Insurance and Annuity Co. U.S. District Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York said she had no jurisdiction over the dispute because the plan involved is a 403(b) program set up by a New York school district. As such, she said, the plan is not covered by the Employee Retirement Income Security Act (ERISA)." (PLANSPONSOR.com; free registration required)
[Official Guidance] Text of IRS 'Employee Plans News' for Practitioners - Special Edition September 2009 (PDF)
2 pages; provides a brief set of links to the recent IRS notices and rulings. Excerpt from an IRS email: 'This special edition discusses the Retirement & Savings Initiatives, Rollovers From Employer Plans to Roth IRAs, the IRS Retirement Plans Navigator and Life Events That Can Affect Retirement Savings." (Internal Revenue Service)
[Official Guidance] Text of IRS 'Retirement News for Employers' - Special Edition September 2009 (PDF)
3 pages. Excerpt from an IRS email: 'This special edition discusses the Retirement & Savings Initiatives, Rollovers From Employer Plans to Roth IRAs, the IRS Retirement Plans Navigator and Life Events That Can Affect Retirement Savings." (Internal Revenue Service)
[Official Guidance] Text of IRS Notice 2009-75: Rollovers from Employer Plans to Roth IRAs (PDF)
8 pages. Excerpt: "This notice describes the federal income tax consequences of rolling over an eligible rollover distribution from a qualified plan described in ? 401(a) of the Internal Revenue Code (Code), an annuity plan described in ? 403(a), a plan described in ? 403(b), or an eligible governmental plan under ? 457(b) to a Roth IRA described in ? 408A. . . . This notice supplements the regulations under ? 408A and Notice 2008-30 to provide additional guidance on a rollover from an eligible employer plan to a Roth IRA." (Internal Revenue Service)
[Official Guidance] Final IRS Regs: Reasonable Good Faith Interpretation of Required Minimum Distribution Rules by Governmental Plans (PDF)
2 pages. Excerpt: "On July 10, 2008, the IRS and Treasury Department published [proposed regulations] . . . that would [amend] the regulations under sections 401(a)(9) and 403(b) of the Code. The IRS and Treasury Department received no comments on the proposed regulations and no public hearing was requested or held. Accordingly, the provisions of these final regulations are identical to the proposed regulations." (Internal Revenue Service)
[Guidance Overview] If a 403(b) Is Terminating in 2009, Must the Plan Be Restated for Final 403(b) Regulations Before Termination?
Excerpt: "Yes. The final 403(b) regulations required 403(b) plans to have a written plan document in place by January 1, 2009. On December 11, 2008, the IRS issued Notice 2009-3 in which the deadline for adopting a written plan for a 403(b) was changed to December 31, 2009, provided the 403(b) plan operates under the final 403(b) regulations for the 2009 calendar year and adopts a written plan effective as of January 1, 2009 by December 31, 2009." (McKay Hochman Co., Inc.)
IRS Tool Teaches Employees about 403(b)s
Excerpt: "The Internal Revenue Service has created a 403(b) retirement plan mini-course for employees. The mini-course is presented as a conversation between a human resource representative and a new employee. During the presentation, the new employee asks, and the HR representative answers, common questions employees may have about the plan." (PLANSPONSOR.com; free registration required)
Target-Date Funds for Government Retirement Markets?
Excerpt: "One of the nation's largest mutual fund companies has pre-announced a new product line that could shake up the governmental 457 and 403(b) deferred compensation markets: a series of 'target-date' index funds. The original TD funds were all actively managed at relatively high fees and carried the risk that portfolio manager would underperform the index, as many have The new funds use index funds only and often have much lower fees and more predictable performance." (Governing.com)
403(b) Group Updates Best Practices
Excerpt: "The SPARK Institute has been developing and updating a set of best practices to serve as a standard industry guide, but keeping all the changes current has been a dynamic, constantly evolving process, said Larry Goldbrum, general counsel of the Spark Institute. Goldbrum said his group is coordinating the updates, with help from fund companies and plan sponsors. He characterizes the newest version as v. 1.04. 'The general consensus is that we have to set a standard,' he said. 'We wanted to create best practices that are flexible, so that service providers and aggregators can provide the services they want to.'" (Financial Planning)
Important New Online Official Survey Asks How the New Retirement Plan IRS Determination Letter Process is Working, How It Might Be Improved
An IRS advisory council is studying the retirement plan document determination letter process. A new online survey form asks for the views of employers, benefits attorneys, third-party administrators, consultants, providers of master & prototype documents, and other stakeholders. In 2005 the IRS radically changed the determination letter process by creating 5-year and 6-year cycles for amending and filing individually designed, volume submitter, and M&P retirement plan documents. Further changes were made in 2007. The advisory council wants to know how the process is working and how it might be improved, including the process for making required amendments or restatements. To learn more or take the survey now, click on the following address or copy and paste it into your web browser: http://www.surveymonkey.com/s.aspx?sm=EL2r2msS3KJI07X_2fq67w6w_3d_3d (IRS Advisory Committee on Tax Exempt and Government Entities (TE/GE))
[Official Guidance] Summer 2009 Edition of 'Retirement News for Employers' by Internal Revenue Service (PDF)
14 pages. Articles include '2009 RMDs from Defined Benefit Plans?', 'ABCs of Loans and Hardship Distributions', 'Correcting a Failure to Implement the Plan's Automatic Enrollment Provisions', 'SIMPLE IRA Plans: The 2-Year Rule on Early Distributions', 'New on the Web', and '7 Steps to Making a Hardship Distribution." (Internal Revenue Service)
Rebuilding 401(k) Retirement Savings: Three Stages of Rebuilding
12 pages. Excerpt: "In the following paper, we discuss the key factors contributing to an individual's ability to rebuild an account balance based on . . . study results. To facilitate the discussion of this process with participants, these factors have been simplified into three distinct stages: STAGE 1: Emotional to rational; STAGE 2: Passive to active; STAGE 3: Short-term to long-term." (Principal Financial Services, Inc.)
[Guidance Overview] DOL Form 5500 Relief and IRS Proposed Prototype Plan Program May Ease Transition for 403(b) Plans (PDF)
5 pages. Excerpt: "Sponsors of 403(b) plans subject to ERISA should begin to gather information for the Form 5500 filing and to identify and review all annuity contracts and custodial accounts to determine whether any can be excluded from their reporting and audit obligations. All sponsors of 403(b) plans, whether or not they are subject to ERISA, should take steps to have a written plan document by December 31, 2009, to ensure operational compliance under the 2007 final regulations retroactive to January 1, 2009, and to correct any operational errors under EPCRS. Sponsors may want to consider whether to adopt a 403(b) prototype plan once the IRS finalizes the program." (Buck Consultants)
Adviser Explains Reason for Rejecting 403(b) in Favor of SIMPLE IRA
Excerpt: "An investment adviser for a public access television station in Enid, Oklahoma, explains that costs were behind the decision to ditch a 403(b) plan for employees in favor of a SIMPLE IRA. Robbie Bullis with Edward Jones investments told PLANSPONSOR 'our local providers . . . were far too costly for PEGASYS' retirement plan budget.' A local newspaper had reported that the change was recommended by an accountant who told the station's board that the 403(b) plan was no longer suitable for nonprofits . . . . Bullis cleared up that the decision was not based on the suitability for all nonprofits, but only for this particular situation." (PLANSPONSOR.com; free registration required)
[Opinion] ACLI Comment Letter to DOL Seeking 403(b) Plan Guidance (PDF)
3 pages. Excerpt: "We also write to urge EBSA to provide audit relief and reporting guidance for purposes of establishing an opening balance for the 2009 Form 5500 annual report for 403(b) plans as well as clarify one of the criteria set forth in the FAB." (American Council of Life Insurers)
Defined Contribution Plans for Nonprofit Organizations: Understand How New 403(b) Plan Requirements Compare to 401(k)s
Excerpt: "When it comes to qualified retirement plans, the 403(b) has long been the default alternative for nonprofit organizations. The lack of nondiscrimination testing for elective deferrals and no plan audit requirement as well as the ability to avoid Employee Retirement Income Security Act (ERISA) regulations have traditionally been the biggest benefits associated with sponsoring a 403(b) plan. However, because of recent regulations, these key differentiators no longer apply to all 403(b) plans. The challenge for nonprofit organizations and the CPAs who serve them is to understand how these new regulations affect 403(b) plans and when a 401(k) might be a better option. This article explores the new regulations and the key questions CPAs need to ask when discussing these options with their nonprofit employers or clients." (American Institute of Certified Public Accountants)
[Opinion] Will SEC Ban Pension 'Pay to Play'? Rules Should Also Govern 457 and 403b Plans
Excerpt: "With its new proposed regulations, the SEC is once again following behind the trailblazing enforcement work of the New York attorney general's office, this time Andrew Cuomo's Pension Fund Code of Conduct ,which has been signed by several investment firms seeking to achieve settlements on placement agent investigations. With billions of dollars to invest, public pension funds are attractive targets for investment managers. If they can find a way to win votes on the pension board by 'influencing' a public official with campaign contributions (or even worse, outright bribes), the profits from managing multi-millions of dollars can easily cover the costs of a little baksheesh. So the SEC is dead right to put a stop to this practice." (Governing.com)
[Guidance Overview] DOL's Limited Relief for Section 403(b) Tax Sheltered Annuity Arrangements' Annual Reporting Requirements
Excerpt: "Employers with Section 403(b) arrangements that have not already rethought the structure and features of those arrangements in light of the one-two punch of tax and ERISA regulation changes should do so soon, in order to ensure that their limited funds used for compensation and benefits are deployed in the most cost-effective manner, to minimize administrative and overhead expenses, and to remain in compliance with the ever-changing law." (Sonnenschein Nath & Rosenthal LLP)
Public Access TV Station Rejects 403(b) in Favor of SIMPLE IRA
Excerpt: "The board of directors for PEGASYS, a public-access television station in Enid, Oklahoma, has approved a change in employee retirement plans. Employees will now participate in a SIMPLE IRA plan, rather than a 403(b) plan. According to the Enid News & Eagle, Wendy Quarles, executive director of PEGASYS, said the change was recommended by an accountant, who told the board the 403(b) plan is no longer suitable for nonprofits." (PLANSPONSOR.com; free registration required)
[Guidance Overview] 2009 Complicance Checklist for Governmental and Nonelecting Church Plans, Non-Erisa 403(b) Programs, 457 Plans, and Other Nonqualified Executive Benefit Plans Not Subject to ERISA (PDF)
14 pages. Excerpt: "The Checklist incorporates requirements for Governmental and Nonelecting Church Plans, Non-ERISA 403(b) Programs, 457 Plans, and Nonqualified Executive Benefit Plans, and provides information on the materials that you will need to file, filing due dates, and agencies to which the filings should be made." (Prudential)
[Guidance Overview] DOL's Form 5500 and Audit Relief for 403(b) Plans
Excerpt: "Specifically, a 403(b) plan now does not need to treat annuity contracts and custodial accounts as part of the plan assets of a 403(b) plan if all of the following are met . . . ." (Seyfarth Shaw LLP)
[Guidance Overview] DOL Avoids A 403(b) Train Wreck With FAB 2009-2. A Learning Opportunity For the IRS?
Excerpt: "The 2009 Plan Year for 403(b) Plans has been recognized as a 'Transitional Year.' This means that if an annuity contract or custodial account to EITHER a former employee or current employee: was issued before January 1, 2009; had all contributions, or rights to contributions, to it cease prior to 1/1/09; has all of the rights enforceable against the insurer without involvement by the employer; and holds only fully vested amounts, assets in that contract will be excludible from the 2009 Form 5500 and 5500-SF. Even better, those former employees owning those contracts will not need to be counted as participants toward that 100 participant threshold for large plans." (Giller & Calhoun, LLC)
[Guidance Overview] DOL's Transitional Relief for 403(b) Plan Form 5500 Annual Reporting and Audit Requirements (PDF)
4 pages. Excerpt: "[Field Assistance Bulletin 2009-02] clarified that plans eligible for the so-called '80-120 rule' would be eligible for a waiver of the audit requirement for the first reporting year. The '80-120 rule' generally provides that if a plan has between 80 and 120 eligible participants as of the beginning of the plan year, the plan administrator may elect to file the same category of annual report (typically the annual report for plans with fewer than 100 participants) that was filed for the previous years. Accordingly, 403(b) plan administrators whose plans have between 100 and 120 eligible participants will be eligible for a waiver of the audit requirement for the first reporting year." (Morgan, Lewis & Bockius LLP)
[Guidance Overview] DOL Provision of Form 5500 Transition Relief for 403(b) Plans with Respect to Pre-2009 Contracts
Excerpt: "At this point, sponsors of 403(b) plans should determine whether they are a small plan or a large plan and prepare to file their Annual Report Form 5500 for the 2009 plan year. In doing so, the plan sponsor should identify all annuity contracts and custodial accounts to determine whether the transition relief contained in FAB 2009-02 will be of any assistance. Specifically, the plan sponsor should determine whether it can exclude certain annuity contracts and custodial accounts from its reporting and audit obligations, and if doing so in any way reduces the number of participants to a level that would simplify the plan sponsor's reporting obligations." (McDermott Will & Emery)
[Guidance Overview] DOL Provision of Form 5500 Transition Relief for 403(b) Programs (PDF)
2 pages. Excerpt: "In Field Assistance Bulletin 2009-02 (July 20, 2009), the U.S. Department of Labor (DOL) provided helpful guidance for sponsors of ? 403(b) programs subject to ERISA in complying with new Form 5500 annual reporting requirements. By way of background, ? 403(b) programs sponsored by ? 501(c)(3) organizations may be subject to Title I of ERISA and in particular its annual reporting requirement on Form 5500. (Section 403(b) programs of public schools and many churches are exempted from ERISA and thus do not have this issue.)" (Sutherland)
[Guidance Overview] DOL Provision of Some Form 5500 Relief for 403(b) Plans (PDF)
3 pages. Excerpt: "In response to concerns expressed by many in the 403(b) community, including a June 16, 2008 letter from the Groom Law Group, that the new Form 5500 requirements for the 2009 plan year, including the audit requirement for large plans with 100 or more participants, would be difficult or impossible for many tax-exempt employers to meet, the Department of Labor ('DOL') has issued Field Assistance Bulletin 2009-2, providing transition relief for plan administrators of 403(b) plans who are otherwise required to first comply with expanded annual reporting requirements for the 2009 plan year." (Groom Law Group)
[Guidance Overview] 403(b) Plan Termination: Illusion or Reality?
Excerpt: "When the IRS included a plan termination provision in the proposed regulations, sponsors wishing to terminate their 403(b) plans anxiously anticipated awaited the issuance of the final 403(b) regulations. However, the excitement over the new provision was short-lived as subsequent and inconsistent statements by IRS officials regarding plan termination caused 403(b) practitioners to wonder if the plan termination provision was an illusion. In applying the IRS's interpretation of the provision, 403(b) sponsors, in many circumstances, will determine that they are not able to effect plan termination unless they have the cooperation of 100% of their plan participants." (SunGard)
Mediator to Decide School Officials, Union 403(b) Dispute in Indiana
Excerpt: "In Indiana, Tippecanoe School Corp. (TSC) officials and representatives of Tippecanoe Education Association met with a state mediator to discuss an impasse over teacher contract language. The Lafayette Courier & Journal reported the two parties disagree on whether the district's new 403(b) retirement plans should be negotiated as part of the master teacher contract or whether the district should have full control over changes to the plans. TSC adopted its provider and plan in December." (PLANSPONSOR.com; free registration required)
[Guidance Overview] DOL Provision of 403(b) 5500 Relief
Excerpt: "[T]he IRS has just issued FAB 2009-02 which provides important transition relief for 403(b) plans. Solely for purposes of Form 5500 (including any related audit), the DOL will not regard an annuity or custodial account as a part of an ERISA 403(b) plan if the investment meets the following requirements: the contract or account was issued to a current or former employee before January 1, 2009; the employer ceased to have any obligation to make contributions (including employee salary reduction contributions), and in fact ceased making contributions to the contract or account before January 1, 2009; all of the rights and benefits under the contract or account are legally enforceable against the insurer or custodian by the individual owner of the contract or account without any involvement by the employer; and the individual owner of the contract is fully vested in the contract or account." (SunGard)
[Guidance Overview] DOL Provision of Form 5500 Reporting Relief for 403(b) Plans
Excerpt: "The U.S. Department of Labor (DoL) has provided transitional relief for administrators of 403(b) plans that make good faith efforts to transition for the 2009 plan year to the Employee Retirement Income Security Act's (ERISA) generally applicable annual reporting requirements. In Field Assistance Bulletin 2009-02, the DoL said the relief is limited to the Form 5500 annual reporting requirements, including the requirement for large plans to include as part of their annual report the report of an independent qualified public accountant." (planadvisor)
[Official Guidance] Text of EBSA FAB 2009-2: Form 5500 Relief from Accounting for Most Pre-2009 403(b) Annuity Contracts and Custodial Accounts
Excerpt: "[T]he administrator of a 403(b) plan does not need to treat annuity contracts and custodial accounts as part of the employer's Title I plan or as plan assets for purposes of ERISA's annual reporting requirements provided that: 1. the contract or account was issued to a current or former employee before January 1, 2009; 2. the employer ceased to have any obligation to make contributions (including employee salary reduction contributions), and in fact ceased making contributions to the contract or account before January 1, 2009; 3. all of the rights and benefits under the contract or account are legally enforceable against the insurer or custodian by the individual owner of the contract or account without any involvement by the employer; and 4. the individual owner of the contract is fully vested in the contract or account." (Employee Benefits Security Administration, U.S. Department of Labor)
PSCA Releases Its First Survey on IRC Sec. 403(b) Plan Target-Date Funds
Excerpt: "According to a survey recently conducted by the Profit Sharing/401k Council of America (PSCA), nonprofit organizations are embracing target-date funds for their IRC Sec. 403(b) tax-sheltered annuities. The survey found that the majority of Sec. 403(b) plan sponsors offer target-date funds, and nearly one-fourth of organizations that do not currently offer such funds plan to do so within the next year." (Wolters Kluwer)
2nd NAGDCA 2009 Survey of Defined Contribution Plans
Excerpt: "This report contains two sections. The National Summary provides a narrative overview of the key areas involved in administering governmental 457, 401(k), 401(a), and 403(b) plans. The survey also provides a pdf of the Overall Survey Results, which offers a look at the survey through charts and responses from all participating entities." (National Association of Government Defined Contribution Administrators, Inc.)
[Guidance Overview] 403(b) Fiduciary Challenges Demand Applying ERISA in Unique Way
Excerpt: "Most striking is the unique ways in which ERISA's fiduciary rules will need to be used in their application to ERISA 403(b) plans. It is not that the rules were never there in the past, it is just that the new rules have forced the industry and employers to more closely define their relationships and the duties for which vendors and employers will each be responsible. This process of defining roles have caused us all to look more closely at how the rules apply, in ways we have never done in the past. All 403(b) practitioners are painfully aware of the controversies surrounding the threshold question of whether any particular plan is governed by ERISA Title 1. Once you get past that point and attempt to, for example, draft a proper investment policy, you will see that we will not be able to apply many of the ERISA rules in the same manner in which we are used to applying them in the 401(k) context. This is particularly true where individual annuity contracts or individual custodial contracts are involved. We are all likely to find some challenging surprises as we work through the details." (Giller & Calhoun, LLC)
403(b) Plans: Best Practices for Multiple Vendor Plans Remittance and Census Data Elements (PDF)
33 pages. Excerpt: "This Best Practices document sets forth certain best practices for the transmission of remittance and census data between employers or employer representatives and vendors, and identifies a basic file convention layout. The document does not define best practices for the methods and frequency of data transmission. The intended benefits of the Best Practices include: More cost effective to support and maintain. Facilitates uniform expectations among parties sharing information. More robust information to help facilitate compliance with 403(b) regulations. More robust information to help employers and their representatives operate their retirement plan." (The Spark Institute)
Best Practices for 403(b) and Related Retirement Plans Information Sharing: Minimum and Comprehensive Data Elements (PDF)
42 pages. Excerpt: "This document sets forth certain best practices with respect to the data elements for information sharing between 403(b) plan employers or employer representatives and vendors (the 'Best Practices'). The document also identifies a basic file convention layout. The document does not define best practices for: (1) the methods and frequency of data transmission, or (2) information sharing with respect to specific plan transactions or events (e.g., loans)." (The Spark Institute)
Best Practices for 403(b) and Related Retirement Plans Information Sharing: Sample Files, Data Sharing Formats, and Coding 'Pipe Delimited' Data (PDF)
6 pages. Excerpt: "This document is arranged in two parts. Part I provides sample file and data sharing formats in connection with The SPARK Institute Best Practices for 403(b) Plans Information Sharing. The Part I material is new. Part II provides guidelines for coding pipe delimited data. Part II was previously released as a stand-alone document. The SPARK Institute is taking this opportunity to combine the Part II material into this document because the subject matter is closely related. Additionally, we clarified certain issues that have been identified in questions we received. No changes were made to the format." (The Spark Institute)
[Guidance Overview] Rules Regarding Section 415 Annual Additions for 403(b) Arrangements Are Similar to Those for Qualified Plans, but Different
Excerpt: "The section 415 annual additions limit is applicable to 403(b) plans. There is an aggregation of all 403(b) plans of the same employer for the annual additions limit ($49,000 in 2009), including related employers. Like qualified plans, if an employee participates in more than one 403(b) plan in a year with unrelated employers, the section 415 limit applies separately for each employer. However, with a 403(b), the 415 annual additions limit is generally applied as if the employee, and not the employer, maintains the plan. Thus, generally, the 403(b) plan is not aggregated with the qualified plan for 415 purposes." (McKay Hochman Co., Inc.)
Target Date Funds Increasingly Featured in 403(b) Plans, Survey Says
Excerpt: "Non-profit organizations are embracing target date funds and a majority of 403(b) plan sponsors have begun offering these funds in their plans, a study released [July 7] showed. The study, from the Chicago-based Profit Sharing/401k Council of America, found that 51% of 403(b) plan sponsors surveyed offered target date funds and nearly a quarter of organizations that did not offer them plan to do so within the year." (Investment News; free registration required)
Nonbank Trustees and Custodians: IRS Web Page
Excerpt: "Pursuant to Treas. Reg. ?1.408-2(e), an entity that is not a bank (or, in the case of Archer medical savings accounts and health savings accounts, not a bank or an insurance company) must receive IRS approval to serve as a nonbank trustee or custodian of the following types of tax-exempt trusts or accounts . . . ." (Internal Revenue Service)
[Guidance Overview] IRS Obsoletes Old 403(b) Guidance; Highlights Unique School Guidance
Excerpt: "The public school guidance is particularly noteworthy, because it affects application of the universal availability requirement ('if any employee of an employer can defer, all employees of the employer must be eligible to defer'). The 'employer' of the employees at a public school includes: the school itself, any other educational organization which has power to levy taxes to support the school or to have a significant role in setting or reviewing the school's budget, and all other educational organizations which receive tax funds from the same levy process." (SunGard)
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