Thus Spake the 800 lb. Gorilla (a/k/a TIAA-CREF)

[Guest erisafried]

A little birdy told me that for purposes of eligibility to participate in a 403(b) plan, TIAA-CREF will credit prior participation in another TIAA-CREF-related 403(b) plan. In the context of a plan with a year of service requirement, this alleged policy would carry over years of service under another, unrelated plan and credit them against the service requirement in the new plan.

I am confused by this because I am not sure how TIAA-CREF can impute years of service from one employer to another, unrelated employer, at least not for purposes of their plans (which, despite the long arm and undue influence of TIAA-CREF, are nominally sponsored by other entities, not TIAA-CREF). I guess it is possible (or maybe not--haven't thought it through) for an employer to count years of service for unrelated employers towards its plan's service requirements, although I suppose you'd have to do so uniformly. Not sure why you'd want to do that, unless you wanted to let a new employee into the plan more quickly. Dollars to donuts, that new employee would be highly-compensated, too.

All I can come up with is that TIAA-CREF would prior credit years of participation in TIAA-CREF investments toward any eligibility requirements that it imposes on investment products it offers under another plan that an individual subsequently participates in.

Anyone ever heard of this "policy" and if so, what gives?

Thanks!

[mbozek]

I dont understand what you are asking. Plan participation requirements for 403B annuities are set by the employer not T/C. An employer can provide for immediate participation in its plans on a nondiscriminatory basis. Considering that few NP employees earn over 95k there is very little likelihood of discrimination in favor of HCEs. T/C only provides the investments used to pay benefits. What kind of eligibility requirements imposed on investment products are you referring to?

[Lori Friedman]

erisafried - 403(b) investment vehicles (both annuity contracts and custodial accounts) belong to individual participants and are highly portable. Did TIAA-CREF actually use the words "credit prior participation"? I'm wondering if TIAA-CREF was merely saying that an individual can use the same underlying investment assets even though he changes jobs and employers.

[Guest JurisPrude]

The employer's plan document must allow for them to waive any servuce requirements if the new hire has related industry service. Usually, if the new hire worked at a similar employer in the industry, the new hire will also have a T/C contract.

But the new hire could have worked as a janitor and not have an existing T/C contract. But still the new employer would let the new hire participate immediately.

[Guest erisafried]

Thanks for your input, all.

I know that the plans themselves "belong" to the sponsoring employers. That was why I was intrigued by the report that TIAA-CREF could bridge service from one unrelated employer to another. I couldn't think of a way that TIAA-CREF could waive plan terms, but that's the way it was presented to me--although not by TIAA-CREF directly. Something might have gotten lost in translation.

FWIW, the plan at issue here is a full-blown ERISA-governed 403(b), not one of the individualized payroll deduction arrangements.

Re: the HCEs and nondiscrimination, for my purposes, the person that the plan sponsor wanted to waive the service requirement for is most definitely highly compensated. Even in the imaginary land where TIAA-CREF can change the terms of plans it doesn't sponsor, I thought it would be troublesome to waive a service requirement for an HCE and not for anyone else.

[mbozek]

EF: Why not share the report with us. You may be confusing T/C's ability to track service with a prior employer with the discretionary provisions that allow an employer to count service with a predecessor employer under its plan. FWIW 403(b) plans are only subject to the 410(b) requirements of the IRC (nondiscriminatory coverage), not 410(a) requirements for eligibility (age 21 and 1 yr of service).