COLLECTED WISDOM™ on 403b Plans

A 403b tax-sheltered annuity (TSA) plan is a retirement plan, similar to a 401k plan, offered by public schools and certain 501(c)(3) tax-exempt organizations. The following are some resources to help manage and administer your 403b.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

Who Are the Top 403b Providers in 2022?

As a small nonprofit, there are just some things that you struggle to find the time, resources, or staff to do. Looking for a 403b provider is one of those things. As a result, many nonprofits just default to one of the larger providers. Here is a comparison chart of the larger providers.

Source: Forusall.com, September 2022

Wake Forest University Retirement Plan Lawsuit Will Proceed

A federal judge has allowed an ERISA lawsuit to proceed. Defendants previously alleged that the 403b university plan was mismanaged by plan fiduciaries because it was filled with excessive-fee investments, that the plan fiduciaries misused revenue sharing to pay for administrative expenses, and that they failed to conduct periodic bids to the market to ensure that the recordkeeping and administrative costs remained competitive.

Source: Plansponsor.com, September 2022

What Qualifies as an "Immediate and Heavy Financial Need" Under Hardship Withdrawal Rules?

Do specialists have a list of the types of expenses for which distributions are deemed to be made on account of an immediate and heavy financial need from a 401k/ 403b plan under the hardship withdrawal rules? Experts from Groom Law Group and CAPTRUST answer the question.

Source: Plansponsor.com, September 2022

IRS Extends Retirement Plan Amendment Deadlines

Many tax-qualified retirement plans, including non-governmental 403b plans and IRAs, were running short on time to make needed amendments to plan documents before the December 31, 2022, deadline to comply with recently enacted law changes. Under the new Notice 2022-33, plans and IRAs now have until December 31, 2025, to amend those documents.

Source: Bdo.com, August 2022

Swift Settlement for Excessive Fee Suit

Capozzi Adler and Miller Shah have wrested another settlement in an excessive fee suit in record time. This time it's the $1.2 billion Rush University Medical Center 403b plan (which was sued by four former workers just a few months ago) that has agreed to settle for $2.95 million as well as "meaningful non-monetary relief related to the ongoing management and administration of the Plan."

Source: Napa-net.org, August 2022

Record Increases Projected for 2023 Retirement Plan Limits

The announcement of the official limits is still a few months away, but early projections from Mercer suggest that nearly all qualified retirement plan limits will increase by unprecedented amounts next year.

Source: Asppa.org, August 2022

403b and Lifetime Income

With all of the current focus on unique programs designed to enhance the attractiveness to participants and fiduciaries of adopting lifetime income programs under defined contribution plans, there is little discussion about how all of this plays out in the 403b market.

Source: Businessofbenefits.com, July 2022

University 403b Plan Faces ERISA Breach Lawsuit

Northeastern University is the latest plan sponsor to confront a lawsuit alleging breach of fiduciary duty to participants. The plaintiff has alleged excessive fees for recordkeeping, administrative services, and investment management in a new fiduciary breach lawsuit.

Source: Planadviser.com, July 2022

How Retirement Plans Can Correct Required Minimum Distribution Errors

When an error in administering required minimum distributions from a defined benefit or defined contribution plan violates Internal Revenue Code requirements, plan sponsors may be able to fix the problem by making corrective distributions under IRS procedures. This article outlines the solutions available when qualified or 403b plans miss or miscalculate RMDs. The coverage includes streamlined procedures for plans applying for IRS approval of a proposed correction and options for requesting a waiver of participants' excise taxes.

Source: Mercer.com, July 2022

Access to CITs Creates Opportunity for 403b Plans

The topic of making CITs permissible investment vehicles in 403b plans has been covered extensively over the past several years. This 5-page paper focuses the dialogue on what will be the most important innovations and their potential outcomes should 403b plans be allowed to use CITs, namely: potentially lower costs and opportunities for greater administrative efficiency, flexibility for more investment innovation, and more choice in short-term investing options.

Source: Dciia.org, June 2022

Universal Availability Audit Steps

Universal Availability violations often result in material adjustments to the financial statements due to the size of the corrective contributions that must be funded by the employer when eligible employees are improperly excluded from participation. For that reason, auditors do need to see census and payroll data for all employees who have been excluded from plan participation, as well as annual notices of the opportunity to defer for those who are eligible but not contributing.

Source: Belfint.com, June 2022

IRS Provides Guidance for Late Pre-Approved Plan Restatements

This IRS clarification allowing correction of these late adoptions without requiring a corresponding VCP filing is very helpful. While the IRS did not specifically address pre-approved defined contribution plans, for which the deadline to adopt a restatement for the current cycle is July 31, 2022, it is reasonable to conclude that this guidance will apply to those plans as well.

Source: Groom.com, June 2022

403b Universal Availability Rules

The 403b plan regulations realized the benefits of inclusion a long time ago, providing that if any employee can elect to make elective deferrals, then all the plan sponsor's employees must be allowed to defer, with very limited exceptions. For this universal availability requirement of the Internal Revenue Code to be satisfied, ensuring that employees have an effective opportunity to make elective deferrals at least once a year is imperative. Having a plan and not telling anyone or telling only the "cool kids" is not enough.

Source: Belfint.com, June 2022

Top Five Operational Errors of 403b Plans

No matter how hard we try, there are mistakes we are doomed to make again and again, even when we know the rules all too well. The reasons are valid, and they are countless: mindlessness, being in a rush, employee turnover, deadlines, distractions, the complexity of the rules, and failure to verify the plan provisions. Not surprisingly, the list of common mistakes financial statement auditors find is nearly identical to the list of common errors published by the IRS. Whether you have a large plan or a small plan, you should perform frequent self-reviews to ensure that you are not systematically making the following top five common mistakes.

Source: Belfint.com, May 2022

IRS Issues Updated Language for Section 403b Plans

The IRS recently issued its List of Required Modifications for pre-approved plan documents that are commonly used by employers that offer and/or contribute to Internal Revenue Code section 403b plans. Insurance companies, recordkeepers, and other providers of such pre-approved documents must now update their documents to incorporate changes reflected in the LRMs and must submit the updated documents to the Internal Revenue Service for approval during the one-year period that begins on May 2, 2022.

Source: Bsk.com, May 2022

IRS Provides Sample Language for 403b Plan Provisions

The IRS has published an information package that contains samples of plan provisions that have been found to satisfy certain requirements of Internal Revenue Code Section 403b and related regulations. The IRS says it has prepared the package to assist providers that are drafting 403b pre-approved plans, and to accelerate the agency's review of them.

Source: Planadviser.com, April 2022

IRS Updates LRMs for 403b Plans

The IRS recently issued an updated Listing of Required Modifications and Information Package for 403b plans. These LRMs contain quite a few changes, from simple clarifications and explanatory notes to more substantive revisions to plan language reflecting changes arising from the PATH, SECURE, and CARES Acts. While the LRMs are intended for 403b plans that use "pre-approved" plan documents, sponsors of individually designed 403b plans also frequently look to the LRMs for insight into what the IRS views as acceptable plan language. This article points out some of the more noteworthy changes in the latest LRMs.

Source: Groom.com, April 2022

Additional 403b Plan Document Guidance Released

The IRS has released a revised Section 403b Pre-Approved Plans Listing of Required Modifications and Information Package, which includes sample plan provisions to assist drafters of 403b pre-approved plan documents in satisfying the requirements of Internal Revenue Code Section 403b and associated regulations.

Source: Ascensus.com, April 2022

Washington University ERISA Lawsuit Reaches Settlement

A settlement agreement has been struck in the ERISA lawsuit filed against Washington University in St. Louis in the U.S. District Court for the Eastern District of Missouri. Though the defendants admit no wrongdoing in the settlement agreement, they have agreed to pay $7.5 million into a gross settlement account from which the funds will be distributed to class members and used to pay the plaintiffs' sizable attorneys' fees.

Source: Planadviser.com, April 2022

Study Finds Wide Range in 403b Plan Fees

A key finding of a recent GAO study is that fees for 403b plans varied widely. The agency surveyed ERISA and non-ERISA plan sponsors and service providers and reviewed the most recent Form 5500 data. It noted in its report that non-ERISA 403b plans are not required to file a Form 5500 with the Department of Labor, making it difficult to get information about this segment of the market.

Source: Plansponsor.com, April 2022

Proposed IRS RMD Regulations Present Challenges, Risks for 403b Plans

The IRS is strategically working to execute the statutory changes that were outlined by the SECURE Act of 2019. However, the IRS's efforts to streamline the required minimum distribution requirements for 403b plans with Section 401(a) qualified plans, such as 401k plans, may have unforeseen challenges and risks.

Source: Employeebenefitsblog.com, April 2022

Attorney Calls Proposed Changes to RMDs From 403bs "A Big Deal"

A change to required minimum distribution rules for 403b retirement plans proposed by the IRS is causing industry chatter. Proposed changes would require a participant to take calculated amounts from each 403b contract they have.

Source: Planadviser.com, April 2022

403b Assets Up, but Fees Can Have Big Effect, Says GAO

The parties in an excessive fee suit focused on the adoption of collective investment trusts have come to terms. The suit alleges that "defendants selected and retained Wells Fargo products over materially identical, yet cheaper, non-proprietary alternatives; selected Wells Fargo products that had no performance history that could form the basis of a fiduciary's objective decision-making process; and failed to remove proprietary funds despite sustained underperformance." More specifically, the plaintiffs took issue with the use of target-date CITs with a relatively short (less than three years) track record.

Source: Ntsa-net.org, April 2022

Is Restricting 403b Vendors Legal in California?

The author says, "A strange thing is occurring in K-12 403b plans in California. Many employers are not allowing new vendors on their 'approved vendor list' or have erected significant barriers to entry. The irony is that these barriers were not in place for the worst vendors this state has ever witnessed and those bad vendors continue to be allowed to hawk their wares with little restriction. New vendors that have something real and different to offer are being denied access. What is going on with vendor lists and what is actually legal according to California law?"

Source: 403b.substack.com, March 2022

403b Plan Design Continues to Evolve

403b plans have undergone many changes since IRS regulations were finalized in 2007. A report from BrightScope and the Investment Company Institute notes that it is difficult to get a full picture of the 403b plan market as some plans are not governed by ERISA. However, the report offers a profile of the 403b plan market and how it has evolved over the years.

Source: Plansponsor.com, March 2022

Defined Contribution Plan Profile: A Close Look at ERISA 403b Plans, 2018

This 68-page report focuses on ERISA 403b plans in 2018. It first analyzes 403b plans in the Department of Labor 2018 Form 5500 Research File. Focus then shifts to more than 6,200 audited 403b plans in the BrightScope Defined Contribution Plan Database, which typically have 100 participants or more.

Source: Ici.org, March 2022

Unanimous Supreme Court Provides Victory to Plaintiffs in ERISA Fee Litigation

The U.S. Supreme Court recently issued a unanimous decision in Hughes v. Northwestern University, reversing and remanding a lower court ruling that had dismissed the case against a retirement plan sponsor. This decision reaffirms that ERISA fiduciary duty of prudence requires continuous monitoring of all investment options under a plan, especially when lower-cost share classes are available for funds.

Source: Employeebenefitslawreport.com, March 2022

On the Hunt for Good Fiduciary Processes? What to do After the Supreme Court Decision in Hughes

The Supreme Court recently handed down its eagerly-awaited decision in Hughes v. Northwestern University. Plan sponsors and 401k and 403b plan administrators had hoped the decision would create clearer pleading standards to free them from the endless line of ERISA class actions alleging fiduciary malfeasance when selecting investment menus and plan service providers. It didn't and now those fiduciaries have some more thinking to do.

Source: Cohenbuckmann.com, March 2022

Individual and Pre-Approved 403b Plan Documents: Evaluating What to Do in 2022

The IRS has announced in recent Rev. Proc. 2021-37 that it will start accepting filings in the second cycle for pre-approved 403b plans on May 2, 2022. In connection with that, the IRS has also indicated that it is considering opening a determination letter process for individually designed 403b plans after all, and has been soliciting comments on doing so. These developments raise several considerations for 403b plan providers and employers regarding their plan documents that are worth considering. This article reviews some key considerations.

Source: Groom.com, February 2022

District Court Enforces 403b Plan Arbitration Clause

A federal district court in Florida sent a proposed ERISA breach of fiduciary duty class action to individual arbitration based on a plan arbitration clause that allowed for individual relief and plan-wide injunctive relief. The case is Holmes v. Baptist Health South Florida.

Source: Erisapracticecenter.com, February 2022

Hughes v. Northwestern University: Key Takeaways for 401k and 403b Plan Sponsors and Fiduciaries

The Court issued a narrow, unanimous opinion that vacated the Seventh Circuit's decision and remanded for further proceedings so that the participants' allegations may be reevaluated as a whole. Despite the high level of industry attention focused on this case, the Court passed on the opportunity to elaborate on what the applicable pleading standard should be for bringing a claim of fiduciary imprudence in violation of ERISA in connection with the management of a defined contribution plan.

Source: Ropesgray.com, February 2022

IRS Issues Required Amendments List for Individually Designed Qualified and Section 403b Plans

The Required Amendments List is an annual list of changes in retirement plan qualification requirements. It also establishes amendment deadlines for individually designed plans. On November 30, 2021, the IRS issued Notice 2021-64, which provides the 2021 Required Amendments List for qualified retirement plans and 403b retirement plans.

Source: Hallbenefitslaw.com, January 2022

The Supreme Court Holds Process Determines Prudence in 401k and 403b Fee Litigation

This week, the Supreme Court reminded fiduciaries that, while deference to their decisions may be warranted, ERISA's duty of prudence will be satisfied by a fiduciary exercising its judgment after a thoughtful process relative to the issue presented. The decision reinforces that there are no hard and fast rules on the appropriateness of fees in 401k and 403b plans; the determination of whether an ERISA fiduciary has acted prudently in offering investment choices and approving the fees associated with those choices is fact- and context-specific.

Source: Debevoise.com, January 2022

The Supreme Court Weighs in on Northwestern DC Case

The U.S. Supreme Court vacated an appellate court's decision in Hughes v. Northwestern, in a ruling issued Jan. 24. This lawsuit had hinged on the "duty of prudence" outlined in ERISA, related to the selection of the investment options in DC plans and recordkeeping fees. These are common themes in ERISA DC plan litigation, and this ruling may have broad impacts on the industry which are touched on here.

Source: Callan.com, January 2022

$10 Billion 403b Smacked With Excessive Fee Suit

This time the defendants are the fiduciaries (and those who appointed them) of the Consolidated 403b Program of Mass General Brigham and Member Organizations, A plan that "at all times during the Class Period, the Plan had at least 6.4 billion dollars in assets under management." The suit notes that at the Plan's fiscal year-end in 2020 and 2019, the Plan had over $10.2 billion and $9.2 billion, respectively.

Source: Napa-net.org, January 2022

403b Plans and RMDs at Age 72

This post includes basic information about tax-deferred investing, RMDs, and IRS tax regulations concerning RMD tax payments and tax penalties. It also describes research findings on how many investors make RMD withdrawals and new life expectancy tables that debut in 2022. It concludes with six take-away action steps.

Source: 403bwise.org, January 2022

Podcast: How Small School Districts Can Offer a Great 403b

Small school districts can offer top notch 403b programs. Here are five options available to small school districts who want to offer a great 403b plan.

Source: Libsyn.com, December 2021

School District 403b Plans and Recordkeeper Selection

This article discusses the California law on the selection, by public school districts and charter schools, of third-party administrators or recordkeepers for their 403b plans. As with school district 403bs and investment selection, there isn't a lot of "law" on the books concerning California school 403bs and recordkeeper selection. But here is what the California Education Code does say.

Source: Focusonpublicbenefits.com, December 2021

Fast-Approaching Deadlines for Employee Benefit Plans

The end of 2021 brings important deadlines for employers that sponsor 401k plans, 403b plans, cafeteria plans, and group health plans. Under the Bipartisan Budget Act of 2018 and related IRS regulations, for 401k and 403b plans using the hardship distribution safe harbor there are several changes, some required and others optional.

Source: Venable.com, December 2021

December 31, 2021 Reminders for Retirement Plan Sponsors

Amendments implementing the 401k and 403b plan hardship distribution changes of the Bipartisan Budget Act of 2018 are the main amendments needed by December 31, 2021. This deadline applies to both calendar-year and fiscal-year plans. The amendments generally need to be retroactive to each provision's effective date.

Source: Segalco.com, December 2021

IRS Revamps 403b Preapproved Program

Rev. Proc. 2021-37 overhauls the IRS opinion letter program for preapproved Internal Revenue Code Section 403b retirement plans, simplifying the program's structure and aligning it with the program for Section 401(a) qualified plans.

Source: Mercer.com, December 2021

Insurance Agents Busted for 403b Fraud

Non-ERISA 403b plans are still one of the stains of the retirement plan business because, without ERISA protection, they put participants at risk for high fees and fraud. In such a case, insurance agents Robert Andrew Lotter and Charles Albert Major were charged with securities fraud violations after allegedly defrauding California school system employees with high-risk investments.

Source: Jdsupra.com, December 2021

IRS Expects 403b Plan Sponsors to Collect Information About Employees' Outside Employment

In a recent "Issue Snapshot" about how the annual limit on retirement plan contributions under Section 415(c) of the Internal Revenue Code applies to 403b plans, the IRS revealed that it expects 403b plan sponsors to maintain procedures to inform employees about Section 415(c)'s special aggregation rule for 403b plans and to collect information from employees about outside employment and retirement plan contributions.

Source: Verrill-law.com, December 2021

IRS Issues Required Amendments List for Individually Designed Plans

On November 30, 2021, the IRS released Notice 2021-64 containing the 2021 required amendments list. This annually issued list describes changes in retirement plan qualification requirements and amendment deadlines for individually designed qualified and individually designed 403b plans. Some items require plans to be amended, while others do not. This article lists the changes to qualification requirements.

Source: Ascensus.com, December 2021

Hardship Distribution Amendment Deadline Is Fast Approaching

Over the past few years, several laws and regulations were passed to loosen rules on hardship distributions for 401k and 403b retirement plans. While there was an extension to give plan sponsors more time to revise plans to reflect the changes, the final day to amend pre-approved qualified retirement plans that adopted hardship distribution regulations is Dec. 31, 2021.

Source: Bdo.com, November 2021

2021 Retirement Plan Year-End Amendments and Operational Compliance

As we approach the end of 2021, it's again time for sponsors of 401(a) and 403b plans to review their plan documents and plan operations to ensure compliance with increasingly complex qualification requirements. While there is no one-size-fits-all checklist, the following provides an overview of these requirements to help plan sponsors (1) determine the need to adopt plan amendments before year-end, (2) ensure operational compliance with changes in law, (3) evaluate the implications of potential plan changes, and (4) take appropriate action/next steps.

Source: Groom.com, November 2021

A Million Dollar 403b Mistake

Here's the thing. I could have had $2 million when my account reached $1 million. Nine years of delayed saving cost me the opportunity to save $1 million because I had one less compound interest doubling period. Another decade later, as compound interest continues to work its magic on my portfolio, the gap between what I saved and could have saved continues to grow.

Source: 403bwise.org, October 2021

Retirement Plan Sponsors Have Short List of 2021 Year-End Amendments

Retirement plan sponsors face a very short list of required amendments to make before year-end, but a few will need to formally adopt plan changes already operationally in effect. This article summarizes the amendments that may be required by year-end for qualified defined benefit, defined contribution plans, and Section 403b plans.

Source: Mercer.com, October 2021

U.S. Business Groups Support Cornell in ERISA Case

Two trade groups recently offered support to Cornell University after the academic institution settled a class-action lawsuit brought by participants in Cornell's 403b retirement program. The U.S. Chamber of Commerce and the American Benefits Council filed an amici curiae (friend of the court) brief in Cunningham et al. v. Cornell University et al., case number 21-88 in the U.S. Court of Appeals for the Second Circuit. The brief supports Cornell and the decision rendered in 2019. The determinative issue of the case was which party bears the burden of proof once an injury has been alleged.

Source: Hallbenefitslaw.com, October 2021

403b Plan Participants: Getting "Noticed"

A reminder for public schools and 501(c)(3) organizations with 403b plans as year-end approaches, employers have an annual notice obligation to employees to meet IRS requirements. This article reviews the IRS employers' annual notice obligation to employees.

Source: Voya.com, October 2021

Despite Pandemic, Nonprofit Workers Boost Participation in 403bs

Despite COVID-19 hitting nonprofit organizations particularly hard last year, nonprofit workers participated in 403b retirement plans at the highest level since tracking began in 2008, according to an annual 403b Plan Survey from the Plan Sponsor Council of America. Overall retirement plan participation continued to climb, rising to 77.2% in 2020, up from 76.6% in 2019 and 72% in 2018.

Source: Psca.org, October 2021

415 Limit Applies in Aggregate When 403b Participant Sponsors Another Plan

In an updated Issue Snapshot, the IRS reminds plan sponsors about rules for the Internal Revenue Code Section 415 annual additions limitation when a 403b plan participant also sponsors a qualified plan to which he contributes.

Source: Planadviser.com, October 2021

IRS Issues Important Reminder on Application of IRC Section 415(c) Limit to 403b Plans

The IRS issued an important reminder of the unique application of the limit under Internal Revenue Code Section 415(c) to 403b plans on August 20, 2021. The IRS's "Issue Snapshot" highlighted a rule that has applied for decades, but with which 403b plan sponsors and administrators are often not familiar.

Source: Morganlewis.com, September 2021

Insurance Agents Charged With Duping California Educators in 403b Plans

The owner of a 403b plan administration firm and another insurance agent allegedly convinced educators to roll retirement plan money into an IRA to invest in the owner's companies, which were in poor financial shape.

Source: Plansponsor.com, September 2021

How Important Are Beneficiary Forms?

When hiring a new employee, one of the initial tasks given to that employee is completing various beneficiary forms for the company's benefit plans. Most people will fill it out and not think about that initial election ever again. Some employees may not fill one out at all. So why is it a big deal?

Source: Asppa.org, September 2021

Second Circuit Revives Share-Class Claim in NYU Retirement Plan Class Action

The Second Circuit recently vacated the district court's dismissal of Plaintiffs' share-class claim. Sacerdote v. New York Univ. To begin, the Court observed that the notion that "prudent fiduciaries may very well choose to offer retail class shares over institutional class shares' because retail shares offer greater liquidity provides no basis to dismiss pleadings that otherwise generate plausible inferences of the claimed misconduct."

Source: Erisalitigationadvisor.com, September 2021

IRS Announces Opening of the Second 403b Pre-Approved Plan Cycle

Like the pre-approved plan document program for 401k plans, the 403b pre-approved plan document program is intended to be on a regular 6-year cycle. Many 403b plan providers and eligible employers, particularly QCCOs and Non-QCCOs, have been wondering when the second cycle would begin and what changes it might include. The IRS has now issued guidance on Cycle 2.

Source: Groom.com, September 2021

IRS Snapshots Show Continued Focus on 403b Plan Compliance

Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers.

Source: Mercer.com, August 2021

The 403b Qualified Plan Distribution Annuity Contract Under SECURE Section 109

You may have noticed that the SECURE Act introduced yet another new twist to the 403b world: the Qualified Plan Distribution Annuity Contract. It's not that Congress was singling out 403b plans, as 401(a) and 457(b) plans can now distribute the QPDAC. But, as in all other things 403bs, there are several unique twists to the rules which exist solely in the 403b world.

Source: Businessofbenefits.com, August 2021

2021 PLANSPONSOR 403b Market Survey

403b plans are in many ways the same as traditional corporate 401k plans, but they also have many unique challenges. The PLANSPONSOR 403b Market Survey covers the providers who serve this market, what they focus on in terms of market segment, and the services they provide to 403b plan sponsors.

Source: Ntsa-net.org, August 2021

Are You Ready to Comply With the New Lifetime Income Disclosure Requirement for Benefit Statements?

The Setting Every Community Up for Retirement Enhancement Act of 2019, enacted December 20, 2019, added a new annual disclosure requirement for benefit statements to participants and beneficiaries. The new disclosure requirement applies to all ERISA-covered defined contribution plans (e.g., 401k and 403b plans), regardless of whether annuities are offered under the plan. With the effective date fast approaching, there has been some confusion as to when the lifetime income disclosure must first appear on benefit statements.

Source: Verrill-law.com, August 2021

Baptist Health South Florida Faces ERISA Excessive Fee Suit

The claims are typical of excessive fee suits, but the plaintiffs also cite language from the 403b plan's investment policy statement and say plan fiduciaries didn't follow it.

Source: Planadviser.com, August 2021

IRS Updates Universal Availability Requirement Information for 403b Plans

The IRS has updated the information it provides concerning the universal availability requirement for 403b plans. The information is contained on the IRS website, with hyperlinks to additional resources.

Source: Ntsa-net.org, August 2021

ERISA 403b vs. ERISA 401k

Which is better? It depends! That's the verdict from an industry insider who compared and contrasted the two in a June 29 session of the 2021 NTSA Summit. "A vexing issue," said Mark Heisler, CEO of ADMIN Partners, LLC, of the question. Not only that, he said, it is "probably the number one question he gets." And the answer, he said, "very much depends" on the particular client involved.

Source: Asppa.org, August 2021

Master Custodial Accounts and the 403b Self Directed Brokerage Account

Today's 403b plans investment structures can actually be a bit misleading. We have designed these arrangements to "look and act" like investment structures for 401k plans. In fact, the 403b arrangements are actually substantially different than their 401k counterparts. There is a bit of history which helps explain these unique arrangements.

Source: Businessofbenefits.com, June 2021

Wake Forest University Baptist Medical Center Sued Over 403b Plan Fees

Wake Forest University Baptist Medical Center, its board of directors, and its retirement benefits committee have been sued for allegedly failing to ensure the plan and its participants paid reasonable fees for investments and administration. The complaint alleges that many of the mutual funds in the Wake Forest Baptist Medical Center 403b Retirement Savings Plan were more expensive than comparable funds found in similarly sized plans, those with more than $1 billion in assets.

Source: Planadviser.com, June 2021

Columbia University Settlement: A Reminder of ERISA Litigation Risk

On May 21, 2021, the terms of the proposed class action settlement in Cates v. The Trustees of Columbia University in the City of New York were announced. The case, which was filed in 2016, involved allegations that plan fiduciaries breached their ERISA duties by causing the plan and participants to pay excessive fees to service providers and by selecting and retaining expensive and poor-performing investment options. In addition to a monetary payment of $13 million, the settlement agreement includes several non-monetary terms.

Source: Faegredrinker.com, May 2021

Terms of Another University 403b Excessive Fee Suit Unveiled

The law firm of Schlichter Bogard & Denton has announced the terms of another settlement of a 403b excessive fee case. According to a press release by the St, Louis-based law firm, it has filed a preliminary settlement approval motion on behalf of Columbia University employees and retirees in their suit against the university involving their 403b retirement plan.

Source: Napa-net.org, May 2021

Bronson Healthcare Group Sued Over 403b Plan Fees

Bronson Healthcare Group and its board of directors are facing an ERISA lawsuit alleging they allowed participants of the organization's 403b Tax Sheltered Matching Plan to be subjected to excessive administrative and investment fees, resulting in lower account balances.

Source: Planadviser.com, May 2021

University Pushes Back on Excessive Fee Class Claims

The fiduciary defendants in a 403b university excessive fee suit say the plaintiffs have not only failed to make their case but that they've taken actions in their account(s) that undermine their arguments. The suit was originally filed in June 2017 by Latasha Davis and Jennifer Elliott on behalf of the plan's more than 24,000 participants and beneficiaries.

Source: Napa-net.org, May 2021

Lawsuit Says Changes to University of Tampa 403b Plan Made Too Late

A participant in the University of Tampa's 403b plan has filed a lawsuit claiming that over the past six years, plan participants have paid at least $3 million in administrative fees, which it says is more than 10 times what they should be. The complaint says the plan's recordkeeper, TIAA, has been able to extract "such grossly excessive fees" because the fees are based not on services it provides to the plan but on a percentage of assets in the plan.

Source: Planadviser.com, May 2021

Higher Education Plan Sponsors Seeing More Demand for Participant Investment Help

A study on higher education retirement plans from Voya found 43% of plan sponsors say motivating employees to save adequately and invest wisely are top challenges to helping their employees prepare for retirement. Interestingly, a separate study from Transamerica found more than half (59%) of higher education institutions view motivating faculty and staff to save adequately for retirement as their greatest challenge in managing their retirement plan. Forty-seven percent said it was helping participants invest wisely.

Source: Plansponsor.com, April 2021

403b Terminations: Important Considerations

There are a variety of important considerations concerning terminations and freezes of a plan and that includes 403b plans. In an ASPPA webcast, Kelsey Mayo, American Retirement Association's Director of Regulatory Policy and a partner with the Poyner Spruill LLP law firm, addressed priorities related to terminations of 403b plans.

Source: Napa-net.org, April 2021

QBAD Distribution Limits When One Spouse Doesn't Participate in a Retirement Plan

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations, in this case, on QBAD Distribution Limits.

Source: Planadviser.com, April 2021

The Relentless Rules of Humble Arithmetic: 401k/403b Fiduciary Litigation at the Crossroads

SCOTUS is currently deciding whether to hear the Hughes v. Northwestern University 403b case. The key issue in the case is an allegation of fiduciary breach by the plan concerning the level of the plan's fees. A number of large financial services firms have recently sold their 401k/403b divisions. Could a possible explanation be concern over a possible review and adverse decision by SCOTUS? Could the humble arithmetic and simplicity of the Active Management Value Ratio metric be a contributing factor in these decisions to leave the 401k/403b arena?

Source: Iainsight.wordpress.com, April 2021

A Technical Analysis of How "Small Amount" Cash-Outs Under 403b Plans Work

The minute differences between 403b plans and 401k plans are often inconvenient, at best, and sometimes they produce serious conundrums in plan administration which can be difficult to resolve. Prominent among these is the issue of "small amount" cash-outs from 403b plans.

Source: Businessofbenefits.com, March 2021

COVID-19 Creating Huge Challenges for Higher-Ed Retirement Plans

As a result of the pandemic, 41% of higher education institutions have already reduced or stopped their employer matching contribution, and 87% of them believe COVID-19 will have a significant impact on their employees' retirement readiness. Those are among the key findings of an inaugural survey of retirement plans in public and private higher education conducted by Greenwald Research on behalf of Voya Financial.

Source: 401kspecialistmag.com, March 2021

Collective Investment Funds and 403b Plans

Collective investment funds are regulated by the Office of the Comptroller of the Currency. Are they eligible investment vehicles for 403b plans?

Source: Ntsa-net.org, March 2021

Favorable Features of 403b

403b plans have been known to receive a bad rap related, in part, to the difficulties surrounding the public K-12 marketplace with which they are associated, and also due to the perception that they are a step behind 401k plans concerning marketplace innovations. Despite these challenges, there are several distinctive features of 403b plans that may give them a leg-up on other types of plans.

Source: Cammackretirement.com, March 2021

403b Plans and Modeling Tools

Many 403b plan providers offer participant tools to help assess risk tolerance and investment preferences, based on their 401k plan service models. Some tools go as far as to suggest specific investment allocations or model portfolios, and offer options to elect periodic rebalancing to keep allocations in line with original targets. Is this a problem?

Source: Ntsa-net.org, March 2021

403b Plans: The Trendsetters for ESG Investing

403b plans are rarely ahead of the curve on major retirement plan innovations. These plans were certainly not the early adopters of trends like per-head flat dollar pricing or zero revenue share funds. However, there is one area in which they are leading the charge: the adoption of Environmental, Social, and Governance investments.

Source: Cammackretirement.com, February 2021

Participants in Terminated 403b Plan File ERISA Lawsuit

A group of 403b plan participants is suing their employer for allegedly keeping imprudent investments as choices in the plan and for causing them to pay excessive fees for plan investments, among other things. According to the ERISA lawsuit, "for the period beginning January 1, 2015, through the date the plan was terminated, May 31, 2019, plan participants lost approximately $4.6 million due to excessive fees and costs as a result of Columbus Regional's breaches of fiduciary duty."

Source: Plansponsor.com, February 2021

2021 403b Retirement Plan Compliance Calendar

This plan compliance calendar for 2021 highlights critical compliance deadlines for 403b retirement plans. While all major dates are covered, some may only apply to particular plan types (and are noted accordingly) and there may be additional deadlines for specific plans that are not covered here. Plans with non-calendar plan years may be subject to different deadlines.

Source: Cammackretirement.com, January 2021

403b Plan Investment Lineups Have Changed

Annuities were the only investment type 403b plans were allowed to use before the passage of ERISA. ERISA added custodial accounts, i.e., mutual funds, as permissible investments. Since regulations were passed in 2007, mutual funds have been embraced more by 403b plan sponsors and participants, and mutual fund fees have decreased.

Source: Plansponsor.com, January 2021

Four-Fifths of Large ERISA 403b Plans Had Employer Contributions

Four-fifths of large 403b plans subject to ERISA had employer contributions and nearly three-quarters of large ERISA 403b plan participants were in plans that offered employer contributions in 2017, according to a joint research study released today by BrightScope and the Investment Company Institute. The study examines 403b retirement plan design and investment lineups.

Source: Ici.org, January 2021

Court Filing Details $13M UPenn 403b Lawsuit Settlement

A new court filing in the U.S. District Court for the Eastern District of Pennsylvania describes the terms of a settlement reached between the University of Pennsylvania and plaintiffs in a long-running and complex ERISA fiduciary breach lawsuit.

Source: Planadviser.com, January 2021

Amending Your 403b Plan for Updated Hardship Withdrawal Regs

A guide to what 403b plan sponsors need to know about upcoming plan amendments for IRS final hardship withdrawal regulations, CARES Act, and SECURE Act. Five key takeaways for 403b plan sponsors.

Source: Voya.com, January 2021

Bill to Expand MEPs to 403bs Introduced in Senate

A bipartisan trio of U.S. Senators has introduced legislation that would expand Multiple Employer Plan access to 403b plans, along with other MEP enhancements.

Source: Asppa.org, December 2020

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