Santo Gold Posted August 26, 2022 Report Share Posted August 26, 2022 We have several 403b plans and none have a named trustee. The document software that we use does not even permit a trustee designation. Yet, we are being asked for a trustee by a new recordkeeper that the plan is transitioning to. Any thoughts? Thank you Link to comment Share on other sites More sharing options...
Peter Gulia Posted August 26, 2022 Report Share Posted August 26, 2022 Nothing in Internal Revenue Code of 1986 § 403(b) requires a trustee. Many § 403(b) plans have no role labeled trustee. Many § 403(b) plans have annuity insurers and § 403(b)(7) custodians. ERISA § 403(b) [29 U.S.C. § 1103(b)] excuses from § 403(a)’s general command to hold an employee-benefit plan’s assets in trust the annuity contracts and custodial accounts recognized in Internal Revenue Code § 403(b). ERISA § 403(b)(1)(2)-(5) http://uscode.house.gov/view.xhtml?req=(title:29%20section:1103%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1103)&f=treesort&edition=prelim&num=0&jumpTo=true To the extent a § 403(b) annuity contract or custodial account requires or permits an instruction from a plan’s fiduciary (rather than a participant, beneficiary, or alternate payee), a typical contract refers to the plan’s administrator. Some refer to the employer. Luke Bailey, Bri and CuseFan 3 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
StephenD Posted August 26, 2022 Report Share Posted August 26, 2022 Recordkeepers have their own view of the world. The way we handle it is that we ask an official of the organization if they are willing to serve as the "trustee". Then we fill-in the box on the Recordkeeper's system with that person''s name. Then the problem goes away. In the 50 years we have been doing this, no problems were ever created by telling the recordkeeper this info. I'm sure all the lawyers will say that it's a bad idea, but sometimes expedience trumps legal preferences. Link to comment Share on other sites More sharing options...
Peter Gulia Posted August 26, 2022 Report Share Posted August 26, 2022 Don’t assume all lawyers would advise against the kind of practical description you mention. However, if I were helping a client placate a recordkeeper’s system, I’d suggest filling-in such a trustee box with the name of the plan’s administrator, as named in the plan’s governing document. Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
joel Posted August 27, 2022 Report Share Posted August 27, 2022 This discussion reveals just how outdated the 403(b) is. These "plans" should be dissolved in favor of doing tax-free transfers to 401(k)s. david rigby 1 Link to comment Share on other sites More sharing options...
QDROphile Posted August 27, 2022 Report Share Posted August 27, 2022 But the insurance industry would never allow that. Link to comment Share on other sites More sharing options...
Patricia Neal Jensen Posted August 30, 2022 Report Share Posted August 30, 2022 Peter Gulia is correct and that is good advice. In response to the other comments: 403(b) plans are very useful and appropriate in many situations. Many "modern" 403(b)'s are invested in mutual funds not insurance contracts. Non-Profits would not benefit from the imposition of deferral testing mandated for 401(k) plans. Most 401(k) plans sponsored by Churches lack pre-approved plan documents and some are subject to current litigation. If one is knowledgeable about 401(k), best to stick to what you know. Patricia Neal Jensen, JD Vice President and Nonprofit Practice Leader |Future Plan, an Ascensus Company 21031 Ventura Blvd., 12th Floor Woodland Hills, CA 91364 E patricia.jensen@futureplan.com P 949-325-6727 Link to comment Share on other sites More sharing options...
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