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Confused on 403(b) Basics in 2009


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I am suffering from a severe mental block with the impending changes toward 403(b) Plans. Any assistance would be greatly appreciated.

1) A Not-For-Profit has a deferral only 403(b) Plan. (There is no employer contribution.) Employer allows people to use any "TSA Product" or "Custodial Account" for deposit of deferrals. Is this Plan considered to be exempt from ERISA and the 5500 Filing; meaning, the only concern would be to get a plan document? Would this Plan need to file any form of 5500?

2) A Not-For-Profit has a deferral only 403(b) Plan. There is no employer contribution. Employer does require that people only use the Annuity or Custodial Account of a specific vendor. Is this Plan considered to be exempt from ERISA and 5500 Filing, or does this Plan now need to file a complete 5500 with Schedule I or Schedule H as would a 401(k)?

3) A Not-For-Profit has deferrals and employer contribution under their 403(b). Employer requires people use only the Annuity or Custodial Account of a specific vendor. Starting in 2009 must this Plan file a complete 5500 with Schedule I or Schedule H, as would a 401(k)?

I am having problems determining what causes a 403(b) to file a 5500, and what the "form" of filing that would be. Again, thanks.

Having braved the blizzard, I take a moment to contemplate the meaning of life. Should I really be riding in such cold? Why are my goggles covered with a thin layer of ice? Will this effect coverage testing?

QPA, QKA

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The DOL's obfuscation got you, too? Consider joining the national conspriacy to fail to recognize ERISA for deferral only 403(b) plans until the DOL provides something but lies for guidance.

1. Maybe exempt, depding on other things you have not mentioned.

2. Not exempt.

3. Not exempt.

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Yes, it has me really frustrated. Well, at least we "know" that in 2009, #2 and #3 need to file a complete 5500. In the meantime, when asked about #1, the answer will be "I dunno".

Thanks for your reply!

Having braved the blizzard, I take a moment to contemplate the meaning of life. Should I really be riding in such cold? Why are my goggles covered with a thin layer of ice? Will this effect coverage testing?

QPA, QKA

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Another two ideas to consider:

In the 2008 Q&As of the American Bar Association’s Joint Committee on Employee Benefits with government agencies’ people, one question asked whether an employer might use a protective filing of Form 5500 without conceding that an ERISA plan had been established or maintained. The EBSA staff response suggested that an employer manage some of the uncertainty by getting a lawyer’s opinion or requesting the Labor department’s ERISA Advisory Opinion. See Q&A-22 in the attachment. That response doesn’t consider that many charitable organizations might think that spending money on lawyers’ fees on a question that’s not essential to the charity’s programs isn’t the best use of the charity’s limited money.

A Field Assistance Bulletin is internal guidance within the Employee Benefit Security Administration. It is not a rule. One might expect EBSA to follow its own Bulletin in EBSA’s decisions about whether to pursue enforcement. But a court need not give any deference to such an interpretation that didn’t go through Administrative Procedure Act rule-making. The consequences of not filing Form 5500 often are the smallest potential liability concerning a plan that an employer operated as a non-plan. But a plaintiff (for example, a surviving spouse who never was asked to consent to the participant’s naming of a beneficiary other than the spouse) might present sympathetic facts that could make it easier for a judge to be persuaded that an ERISA plan existed.

2008_ABA_QandA_EBSA.pdf

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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I'm not convinced that #2 is not exempt. Selecting the provider(s) will not necessarily cause an exempt TSA to become not exempt. The conservative approach would be to treat it as not exempt, but filing a Form 5500 probably nails the coffin shut.

Also, explain how, under the new regs (which eliminate 90-24 transfers), you can have a TSA that allows employees to select any account or product without the employer first obtaining an information sharing agreement from that provider.

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Hey, Larry,

I suspect many ERs with 403b plans so designed and that have an EE that wants to exchange his 403b contract to be with a vendor that the ER does not already have an info sharing agreement will propose an info sharing agreement to that vendor, if for no other reason than to accommodate the EE that wants to exchange his 403b contract to that new vendor--and if signed, then the exchange is made.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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I don't disagree, but won't that mean that any participant can then use that vendor and therfore defeat the purpose of some employers to keep a lid on the scattered nature of 403(b)s?

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It would, but contractually there would be an info sharing agreement between the ER and that vendor, and they'd each know how to contact the other to coordinate info regarding the 403b contracts that migrate to that vendor.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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