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khn

Different Plan Provisions for Multiple Vendors

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Is it permissible to have one plan document for a 403(b) plan, but different provisions at different vendors? For example, can Roth contributions be added only at Fidelity and not TIAA or Valic, if it's written into a custom plan document?

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Sure!  As long as the plan document is clear on what is allowed, this should be permissible.

The one practical problem is that the IRS will no longer rule on custom plan documents, but will only issue opinion or advisory letters on pre-approved plans.  So if you choose this mechanism, you'd be on your own in making sure it was acceptable under 403(b).

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Perhaps, with luck, this might be accomplished without a custom document? Don't know if such provisions would perhaps be allowed in a pre-approved document under an "other" election, or in an Appendix, etc...? Just a thought.

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I have to ask a (maybe not so obvious) question.  And maybe I am not understanding what you are wanting to do even if permissible, is it wise?

How the heck is payroll going to setup so many deduction codes based on which vendor the participant has requested?  That's a multiple for each vendor allowed.  I can't imagine multiple data feeds going in and out to a bunch of different vendors for the same purpose ( single retirement plan)....What if the participant wants to change vendors to access a different provision, can they?  Or can a participant direct some funds to one vendor and other funds to another vendor? Or are you going to have some specific way to limit some employees to one vendor and others to a different one?  Wouldn't you have to be careful about BRFs? 

Honestly I would pass this by the payroll/programming department (either inhouse or your third party payroll provider) to see what the cost is going to be for (1) setup and (2) ongoing.

I would study the WHY there is a need for more than one vendor....

 

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