Sido

I'm ready to update the plan document which will include a list of approved vendors to be incorporated into the plan, and my question is on the model language for public schools. I've also looked at plan documents of other public schools that use the model language, and generally see the following- option 1) use the model language as published by the IRS word for word, no summary page/ adoption agreement, and include everything the IRS published. option 2) use model language but include an adoption agreement where you pick yes or no (i.e. for loans you would select yes or no), and in the model language they add "If elected by the Employer in the Adoption Agreement." The IRS language also has default language than can be restrictive to universal availability, and this additional restriction is generally left as a choice to be selected in the adoption agreement. For example, for loans the model language says "4.1 Loans . Loans shall be permitted under the Plan to the extent permitted by the Individual Agreements controlling the Account assets from which the loan is made and by which the loan will be secured," whereas language that follows option 2 would read "If elected by the Employer in the Adoption Agreement, loans shall be permitted under the Plan to the extent permitted by the Individual Agreements controlling the Account assets from which the loan is made and by which the loan will be secured." If we want to use the model language, but do not want all of the optional provisions (such as loans), will going down the path of option 2 meet the requirements of the code? Don't want to go down the path where we need a private letter ruling down the road. .01 Amendments. (a) Reliance. If a public school employer amends its plan language to include any portion of the model language, the form of the written plan will be treated as meeting the requirements of § 403(b), to the extent covered by the model plan language that is adopted. This reliance applies only if the employer adopts the model language on a word-for-word basis or adopts an amendment that is substantially similar in all material respects. .02 The 2007 regulations provide that a § 403(b) plan, including one established by a public school employer, may contain certain optional features not required to satisfy § 403(b), such as in-service distributions from rollover accounts, distributions for financial hardships, loans, contract exchanges, and plan to plan transfers. If optional provisions are used, the optional provisions must meet, in both form and operation, the relevant requirements under the Code and the 2007 regulations, as well as operate in accordance with the terms of the plan. If a public school employer adopts one or more of these optional model plan language provisions for its § 403(b) plan, the form of the plan will be treated as meeting the requirements under § 403(b) with respect to those provisions.

Background- Small school district with an ERISA exempt 403(b) plan (Alaska). Since we are ERISA exempt, we don't have to file a 5500. Loans are not allowed, and it's a very simple and easy plan to manage since there isn't a lot of activity. We had a single-sourced 403(b) provider, and added a second vendor (Vanguard) as a low cost provider for the employees. We also kept the original provider (we will be going from one vendor to two). For both providers the employees have 403(b)(7) accounts. As of now no contributions have been made to Vanguard. I'm trying to see if there is anything I need to do with the plan document. Is it a requirement that the approved vendors be listed in the plan document? If so, do I need to update and amend the document to add the second approved vendor? The plan document was last updated in the middle of 2009 and it lists the original provider as the approved provider. On the IRS website I see stated "7.3 Current and Former Vendors.The Administrator shall maintain a list of all Vendors under the Plan," but I don't see anywhere that it says this must be incorporated into the plan document itself. Could I make a list on my own to satisfy the requirements and not put it in the plan document? When I set up the Vanguard account, I put myself down as the administrator (I'm responsible for all the finances at the district) which allows me to add participants, send payroll deductions, and authorize distributions. In our written plan document, I see nothing that references the role of "administrator." The original vendor has told me they are actually the administrator for our plan (which I don't agree with since it isn't listed anywhere), and if we want to add the second vendor we will have to list them as the plan administrator (I don't want to do that!). Any suggestions on how I should proceed? On a side note some of the new teachers have asked if we can add another vendor they used in the past (which I am not opposed to), but it would be this same process all over again.