Ellie Lowder

The National TSA Association would be a good resource in helping identify providers who do support ERISA 403(B) plans, and who might have group products for those plans. Telephone #: 800-543-0152.

H.R.833 (The Bankruptcy Reform Bill) passed the House on May 5 - but even if it passes the Senate, I understand Clinton is expected to veto the bill. It extends federal bankruptcy protection to IRAs, 457, 403(B)s and other pre-tax retirement plans.

My read on it is that the defined benefit plan will no longer need to be aggregated with the 403(B) plan because of the repeal of 415(e). However, I believe that the defined contribution plan will still need to be aggregated with the 403(B) plan. Hence, with the DB plan & the 403(B) plan, Option C would permit a "full" 25% of adjusted compensation and with the DC/403(B) plan, there would only be one 415 limt. How do others read this?

The spousal beneficiary may retain the deceased's TSA as beneficiary of the deceased, in which case RMD requirements would be based on the deceased's age 70 1/2. Or, spouse may roll the account into an Individual Retirement Account. Under current law, I am not aware the spouse could roll into his/her own TSA!

The DOL routinely accepts 5500s for ERISA 403(B) Plans without schedules, and finally, in very early 1998, issued an information letter confirming that only the information specifically required by lines 1-5, 6b and 9 on the 5500 need be included. That, of course, could change, but it appears no schedules are currently needed.

I am aware of one document service provider: Pen Serv, 1215 Meetinghouse Rd., Ambler, PA 19002, phone 215-628-8950. Will provide document and updates. There are others - this just happens to be one that has been recommended from time to time as a good resource.

Ineligible employees is not a defect that can be corrected under APRSC - only Operation failures can be self-corrected. Eligibility failures can be corrected under TVC. Refer to Revenue Procedure 99-13 for more information.

Revenue ruling 90-24 permits the transfer of all or any portion of your account value to another 403(B) option of your choice. Realistically, you might want to consider transferring only portions which no longer have surrender charges - or even, the free withdrawal amount you are generally allowed under 403(B)(1) annuities.

Public School systems are exempt from Title I of ERISA, hence the "reasonable choice" requirement under the DOL regulation does not apply to them. More and more public school employers are limiting service providers to those who will provide certain compliance support (in this "era" of IRS audit activity) and sign Hold Harmless/Service Provider agreements. Incidentally, "beauty is in the eye of the beholder". Annuities for 403(B) plans are not "horrible". Based on current annual flows into 403(B) plans, and assets held in those plans, annuities are favored as options. ------------------

Pairing a 401(a) plan with 403(B) deferrals is a popular design. However, if employer contributions are matched to 403(B) deferrals, then the 403(B) piece is also part of the ERISA plan. Many employer make 401(a) employer contributions (money purchase is popular with well funded 501©(3)s), then permit employees to make elective deferrals to the 403(B) paln which "sits" outside the ERISA plan. Unless catch up Option C is used, there are two separate 415© limits, permitting highly paid employees to make "sizeable" deferrals.

The National TSA Association, with over 30 industry sponsors, would be an excellent source of information on vendors for the church markets. As their Technical Advisor, I am aware that some of the providers do support 403(B) plans sponsored by religious organizations. ------------------

IRS audits of the 403(B) plans offered in public schools have occurred in several states - Minnesota, Iowa, Ohio, and Illinois. Most common violation reported by the IRS has been contributions which exceed the eligible exclusion allowance/415/402(g) limits. Public School employers have been required to pay under with held taxes for those excesses. Second most common violation recently reported was violation of IRC403(B)(12)(A)ii where the elective deferral plan was not made available to virtually all employees. Most commonly, substitute teachers who normally worked more than 20 hours per week were being excluded!