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.

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

IRS Issues Guidance on SECURE Act Provisions Easing Safe Harbor Plan Burdens

The IRS on Dec. 9 issued guidance that addresses certain provisions of the SECURE Act that increase the automatic enrollment cap percentage and affect safe harbor plans, including safe harbor 401k plans and certain 403b plans. The guidance is contained in Notice 2020-86.

Source: Asppa.org, December 2020

IRS Notice Addresses 401k/403b Safe Harbor SECURE Act Provisions

The IRS has issued Notice 2020-86, providing guidance for implementing provisions of the SECURE Act of 2019. Specifically, the SECURE Act provisions addressed deal with features and procedures of 401k and 403b plans that incorporate safe harbor designs for satisfying nondiscrimination testing requirements, and automatic enrollment and automatically increased deferral rates.

Source: Ascensus.com, December 2020

Advance Copies of 2020 Form 5500 Released

The DOL, IRS, and the Pension Benefit Guaranty Corporation have released advance copies of the 2020 Form 5500 and Form 5500-SF, as well as their schedules. They will be used for reporting information about the 2020 plan year.

Source: Asppa.org, December 2020

December 31 Sunset of Safe Harbor Correction Method

A special IRS-approved correction method available for elective deferral failures in 401k and 403b plans with automatic contribution features will sunset on December 31, 2020, meaning it will not be available to correct elective deferral failures that begin after that date. The loss of this favorable correction method going forward serves as a good reminder to plan sponsors to confirm that their plans, in operation, are correctly implementing employee elective deferrals.

Source: Jdsupra.com, December 2020

Impact of COVID-19 and Economic Conditions on 403b Plans

PSCA conducted a brief survey of 403b plan sponsors in October 2020 to determine how they are responding to the COVID-19 pandemic and economic conditions. This is the full 10-page report.

Source: Psca.org, December 2020

Spousal, Annuity Rights for 403b Distributions

The IRS has issued Notice 2020-80, which requests comments on spousal and annuity rights that may potentially apply to 403b custodial accounts that are distributed to participants in-kind upon the termination of a 403b plan.

Source: Futureplan.com, December 2020

Terminating a 403b and Starting a 401k

"I work with an Employee Retirement Income Security Act (ERISA) 403b plan sponsor that has a 403b plan in which each participant owns an individual annuity contract. We wish to replace the 403b plan with a 401k plan. Can we terminate the 403b plan and start a 401k plan immediately afterward? Are there any special legal issues in terminating the existing plan or starting the new plan, considering that participants are not terminating employment?"

Source: Plansponsor.com, November 2020

IRS Issues 2020 Required Amendments List for Qualified Retirement Plans and 403bs

The IRS on Nov. 20 issued the 2020 list of required amendments for individually designed plans qualified under Internal Revenue Code Sections 401(a) and 403(b). The list is contained in Notice 2020-83.

Source: Ntsa-net.org, November 2020

Guidance Provides More Detail on Terminating 403b Plans

The SECURE Act directed that guidance be issued providing that a section 403(b)(7) custodial account could make distributions in kind upon plan termination. On November 5, the IRS issued Revenue Ruling 2020-23 and a related Notice, 2020-80, in response to this directive.

Source: Groom.com, November 2020

IRS Issues 403b Plan Guidance Under the SECURE Act

In Revenue Ruling 2020-23, the IRS provides guidance, as directed by the SECURE Act, on the distribution of individual custodial accounts upon the termination of 403b plans. In Notice 2020-80, the IRS requests comments on the application of annuity and spousal rights provisions related to distributions from 403b plans.

Source: Westlaw.com, November 2020

IRS Simplifies Certain 403b Plan Terminations

The IRS has issued guidance for employers and employees related to terminating 403b plans that fund benefits through 403(b)(7) custodial accounts. This SECURE Act-based guidance from the IRS will allow for distributions of custodial accounts under rules similar to those that have been available for annuity contracts under a 403b plan.

Source: Planadviser.com, November 2020

EBSA Enforcement Statistics from Fiscal Year 2020

The Employee Benefits Security Administration enforces ERISA laws and regulations, including conducting civil and criminal investigations. EBSA investigations often result in recovering money from enforcement actions, voluntary fiduciary correction programs, abandoned plan programs, and informal complaint resolution. Enforcement statistics from the fiscal year 2020 provide some insights on future enforcement efforts by EBSA.

Source: Bsllp.com, October 2020

Few Retirement Plans Need Year-End Amendments

Most retirement plan sponsors won't face year-end amendment deadlines in 2020, but a few may need to adopt amendments to reflect changes in law or plan design. This article summarizes the amendments that may be required by year-end for qualified defined contribution and defined benefit plans, 403b plans, and one amendment for some nonqualified deferred compensation plans.

Source: Mercer.com, October 2020

A New Education Priority for 403b Plans?

There's been a shift in emphasis on retirement plans in the non-profit sector. For the first time, organizations that provide 403b plans reported that retirement planning, rather than increasing participation, was their top focus for employee education, according to the 12th annual 403b Plan Survey from the Plan Sponsor Council of America.

Source: Napa-net.org, October 2020

Bill Would Let 403bs Use PEPs

Nonprofits and colleges would able to join the SECURE Act's much-anticipated pooled employer plans under a bill introduced last week by Rep. Ron Kind. If the bill passes, it will be very big news for any business that is lining up to become a pooled plan provider. There is expected to be a flood of applications for that status, once the DOL finalizes its criteria for those plan providers.

Source: Investmentnews.com (registration may be required), October 2020

SCOTUS Seeks Fed Input on Excessive Fee Suit

The nation's highest court has sought the federal government's input on a case that the law firm of Schlichter Bogard & Denton says is having a "chilling effect" on excessive fee litigation. Specifically, the U.S. Supreme Court has "invited" the Acting Solicitor General to "file a brief in this case expressing the views of the United States" in a suit brought against Northwestern University and the fiduciaries of its 403b plan.

Source: Napa-net.org, October 2020

403b Retirement Plan Fee Litigation Update

Despite the COVID-19 pandemic, there have been no signs of a slowdown in the litigation arena. Since the last comprehensive update on 403b retirement plan fee litigation in April, there have been some significant updates.

Source: Cammackretirement.com, September 2020

Relief for Distributing Summary Plan Descriptions

2020 is the year that ERISA 403b plan must issue summary plan descriptions to plan participants. Experts from Groom Law Group and Cammack Retirement Group answer questions concerning SPD distribution due to the COVID-19 pandemic.

Source: Planadviser.com, September 2020

IRS Revenue Procedure 2020-40 Provides Extensions of Retirement Plan Amendment Deadlines

Revenue Procedure 2020-40 (Rev. Proc. 2020-40) expands the situations in which the plan amendment deadline may be extended for discretionary amendments made to pre-approved qualified retirement plans and pre-approved Internal Revenue Code Section 403b plans.

Source: Westlaw.com, September 2020

Retirement Plan Update: New DOL Disclosures and Updated IRS Notices

The DOL recently issued interim final regulations requiring new information to be included on ERISA-covered defined contribution plan participant account statements under the SECURE Act. The guidance only applies to defined contribution plans, such as 401k and 403b plans. The IRS also recently updated safe-harbor explanations that can be used to satisfy the tax notice requirements in Code Section 402(f). These requirements generally require plan administrators to provide a written explanation of tax consequences when making eligible rollover distributions from a qualified retirement plan.

Source: Shermanhoward.com, September 2020

New SECURE Act Guidance: Lifetime Income Disclosures for 401k and 403b Plans

The DOL announced new guidance on lifetime income disclosures that must be included in pension benefit statements furnished to participants in defined contribution plans, such as 401k and 403b plans. This guidance, issued in the form of an interim final rule, sets forth the rules that plan administrators must follow in implementing the lifetime income disclosure requirement that was added to ERISA by Section 203 of the 2019 SECURE Act.

Source: Insidecompensation.com, September 2020

Checklist for Amending a 403b Plan

This is a checklist for amending a 403b plan for a public educational institution. The general steps to amend a 403b plan are reviewed.

Source: Ntsa-net.org, August 2020

Mercy Health Corp. Faces 403b Plan Excessive Fee Lawsuit

An ERISA lawsuit has been filed against fiduciaries of Mercy Health Corp.'s 403b plan. Among other things, the lawsuit alleges the health care system unreasonably maintained investment advisers and consultants despite the known availability of others with lower costs and/or better performance histories.

Source: Plansponsor.com, August 2020

Not "Wired at Work"? New DOL E-Disclosure Rule is Here to Help

The DOL announced final regulations that describe new "safe harbor" procedures for electronic delivery of required ERISA retirement plan disclosures such as Summary Plan Descriptions, quarterly or annual account statements, and other items. The new safe harbor procedures are an addition to the DOL e-disclosure rules that date back to 2002 and represent an improvement on the 2002 rules for employees who are not "wired at work," as defined in those regulations. The safe harbor procedures took effect on July 27, 2020. A plan administrator that relied on the safe harbor before that date wouldn't be subject to enforcement action, the DOL vowed.

Source: Eforerisa.wordpress.com, August 2020

IRS Updates Operational Compliance List for Retirement Plans

IRS recently updated its Operational Compliance List for qualified retirement and 403b plans to identify changes in law and guidance affecting plan operations. The Operational Compliance List reminds sponsors about revised operational requirements taking effect during a calendar year, even though conforming amendments might not be due until a later date.

Source: Mercer.com, July 2020

CARES Act Special Considerations for 403b Plans

Participants in 403b plans may not be able to take as much in distributions and loans as provided for in the CARES Act. Also, they may not enjoy the savings provided by the elimination of tax penalties for early distributions in the same way other plan participants will. Participants invested in annuity contracts may face charges for distributions and limits on amounts they can take as a distribution or loan that they may not be aware of.

Source: Plansponsor.com, July 2020

Sutter Health 403b Plan the Target of Excessive Fee Suit

A lawsuit has been filed against fiduciaries of the Sutter Health 403b Savings Plan for breaches of their fiduciary duties under ERISA. Defendants are accused of failing to leverage the size of the plan to negotiate for lower investment and recordkeeping fees, among other things.

Source: Planadviser.com, July 2020

Required Distributions for 2020 Suspended for Many Plan Participants

The CARES Act creates a moratorium on required minimum distributions for 2020. The one-year required minimum distribution moratorium under the CARES Act applies to IRAs and defined contribution retirement plans, such as 401ks, money purchase pension plans, 403b plans and some government plans. Plans may need to be amended to accommodate the moratorium.

Source: Mcdonaldhopkins.com, July 2020

Return of 2020 RMDs Allowed by New IRS Announcement

On June 23, the IRS issued a notice that told taxpayers they could unwind any required minimum distributions from their retirement accounts that they had taken in 2020. This provides a significant opportunity for IRA beneficiaries who didn't need this money for expenses. They can put these distributions back into their IRAs to grow there tax-deferred, lowering their total tax bill.

Source: Wealthspire.com, July 2020

CARES Act Expansion of In-Service Withdrawals Highlights 403b Plan Surrender Charge Disparity

The CARES Act includes provisions that allow retirement plan sponsors to provide plan participants the opportunity to withdraw funds from a defined contribution retirement plan if they are facing adverse financial consequences due to the COVID-19 pandemic. Unlike other DC plans, 403b plans are administered by insurance companies. These plans typically feature annuities that require the payment of a surrender charge of up to 12% on asset withdrawals or transfers. Plan participants in a 403b will need to check with their plan administrator to determine if any surrender charges apply before making a withdrawal.

Source: Hallbenefitslaw.com, July 2020

IRS Issues New Guidance for Mid-Year Changes to Safe Harbor 401k and 403b Plans

The IRS issued Notice 2020-52 addressing mid-year reductions and suspensions of contributions to Safe Harbor 401k and 403b plans. In response to the COVID-19 pandemic, the Notice provides some temporary relief for plan sponsors that wish to reduce or eliminate safe harbor contributions mid-year.

Source: Spotlightonbenefits.com, July 2020

403b Plan's Use of Actively Managed TDFs Challenged in Lawsuit

A former participant of the MedStar Health Retirement Savings Plan has filed a proposed class-action lawsuit against MedStar, its 403b retirement plan committee, and individual committee members for breaching their fiduciary duties under ERISA. The lawsuit says the defendants not only selected and retained high-cost and poorly performing investments but also failed to fully disclose the expenses and risk of the plan's investment options to participants.

Source: Planadviser.com, July 2020

The IRS Provides Relief for Mid-Year Reductions in Employer Contributions to Safe Harbor Plans

The Internal Revenue Service issued Notice 2020-52, which provides guidance and temporary relief for employers who may choose to reduce contributions during 2020 to their safe harbor 401k or 403b plan.

Source: Groom.com, July 2020

The Push to Allow CITs in 403bs

Fees in 401k plans have been falling for years, in part as a result of lower investment costs in mutual fund alternatives such as collective investment trusts, an option that is legally prohibited for most 403b plans. Some members of Congress are trying to change that, and the initiative could get more attention soon.

Source: Investmentnews.com (registration may be required), June 2020

Replacing Mandatory Employee Contributions With Automatic Enrollment

403b plan sponsors should do their homework to review participant data to ascertain how many individuals are indeed "maxing out" over and above their mandatory contribution. If there are a lot of employees who fit this description, perhaps automatic enrollment is not the right decision. This might also be a sign that employees are bumping up against their 415 limits on total contributions, which may warrant consideration of alternative designs. However, for the majority of 403b plan sponsors currently utilizing a mandatory contribution formula, auto-enrolment is likely a viable option.

Source: Cammackretirement.com, June 2020

IRS Allows Remote Notarization of Participant Elections for 2020

The IRS issued Notice 2020-42 to provide temporary relief for certain participant elections required to be witnessed in the "physical presence" of a plan representative or notary public, including spousal consents. The Notice is a welcomed response to the major challenges posed by the social distancing measures put in place due to the COVID-19 pandemic, and it provides plan administrators with additional flexibility to use remote notarization and similar services for all of 2020.

Source: Groom.com, June 2020

The Next Evolution in 403b Plans: Investments

While 403b plans have made great strides, lifting restrictions on the types of investments the plans can offer and considering more diverse investment types could further improve participant retirement outcomes.

Source: Plansponsor.com, June 2020

Settlement Reached in Emory University 403b Excessive Fee Case

Schlichter Bogard & Denton filed a preliminary settlement approval motion on behalf of Emory University employees and retirees in their suit against the university involving their 403b retirement plan. The plaintiffs in the case, filed in August 2016, sued for alleged breach of fiduciary duty under ERISA. The settlement terms include the creation of a $16.75 million settlement fund for the plaintiffs, as well as substantial non-monetary relief involving changes in the 401k plan.

Source: Streetinsider.com, May 2020

Judge Gives Parties in Cornell 403b Suit Options for Proceeding

The ERISA lawsuit against Cornell University could face a time delay due to the COVID-19 pandemic. A federal judge noted that the pandemic will affect civil jury trials in the Southern District of New York "for a considerable and presently unknowable time to come."

Source: Planadviser.com, May 2020

Appellate Court Calls for Another Look at a 403b Suit

A university that had won a dismissal of claims in an excessive fee suit will now have to confront some of those charges. Noting that, "at this point, the complaint only needed to give the district court enough to infer from what is alleged that the process was flawed," the Eighth Circuit Court of Appeals breathed new life into some of the claims brought against fiduciaries of St. Louis-based Washington University's $3.8 billion 403b plan.

Source: Ntsa-net.org, May 2020

Improving Investment Outcomes for 403b Plan Participants With CITs

BlackRock provides an overview of the features of CITs, why plan sponsors use CITs in 401k plans, the potential cost savings for 403b retirement savers if CITs were permitted as an investment option in all 403b plans, and ongoing legislative efforts to change the law, including the IRC, to allow all 403b plans to have the option to invest in CITs.

Source: Blackrock.com, May 2020

403b Plan Catch-Up Contributions - Updated

This IRS snapshot discusses catch-up contributions under a 403b plan. A 403b plan may have non-elective contributions (including matching and non-matching contributions) and elective deferrals. A 403b plan may also permit participants to make additional elective deferrals under the age 50 catch-up in IRC Section 414(v) and the special 403b catch-up in IRC 402(g)(3).

Source: Irs.gov, May 2020

Lawsuit Argues Fees Are Excessive for University of Miami 403b

Another lawsuit has been filed challenging fees for a university's 403b plan, this one against the University of Miami. The plaintiffs say there is additional evidence for their claims, "such as incorrect reporting on mandatory Department of Labor disclosures about the amount of administrative fees paid by [the] participants."

Source: Planadviser.com, May 2020

The IRS Extends Retirement Plan Payment and Filing Deadlines

In response to the coronavirus pandemic, on April 10, 2020, the Internal Revenue Service issued Notice 2020-23, extending the deadlines for the time-sensitive actions set forth in Revenue Procedure 2018-58 to July 15, 2020. These extensions apply to certain retirement plan payment and filing obligations that have deadlines on or after April 1, 2020 and before July 15, 2020.

Source: Truckerhuss.com, May 2020

SECURE Act: Tenfold Penalty Increase for Retirement Plan Filing and Notice Failures

To help pay for the changes that the SECURE Act will bring to the retirement system, as well as to increase compliance with filing reports and providing notices, the legislature also included a significant increase in penalties for late filing of plan returns and plan notices. These new penalties apply to all returns, plan statements, and require plan notices that must be provided after the end of 2019.

Source: Hallbenefitslaw.com, May 2020

DOL Provides COVID-19 Relief for Retirement Plans

On April 28th, the Employee Benefits Security Administration of the Department of Labor, together with the Department of the Treasury, issued helpful guidance for retirement plans that extends certain deadlines and provides other relief in light of the national coronavirus outbreak. The guidance will significantly affect ERISA-covered retirement plans, plan sponsors, fiduciaries, plan participants and beneficiaries, and plan service providers.

Source: Groom.com, May 2020

403b Retirement Plan Fee Litigation Update

Despite the COVID-19 pandemic, 403b retirement plan litigation remains largely uninterrupted. While not all claims are successful, to manage risk, plan sponsors should understand the issues and keep track of the litigation surrounding retirement plans. This is a comprehensive update on the status of 403b retirement plan lawsuits.

Source: Cammackretirement.com, April 2020

403b Plans and Optional Retirement Plan Provisions

Can a pre-approved 403b plan have an optional retirement plan provision? Would it fall under the mandatory contributions? ORPs can take on different components of a 403b plan. They are not all the same.

Source: Ntsa-net.org, April 2020

How to Correct Late Salary Deferral Deposits

Late deposits of employee 401k and 403b deferrals continue to be a common error and consistent with the top ten list of mistakes the IRS and DOL identify during their audits and investigations. When employee deferrals are not deposited timely, there are two available correction avenues: self-correction or completing a filing through the DOL's Voluntary Fiduciary Correction Program. This article discusses the rules regarding the timely deposit of salary deferral withholdings, when a timely deposit doesn't occur, and the steps the plan sponsor must take for each of the available correction options.

Source: Belfint.com, April 2020

COVID-19 World: Reducing or Suspending Company Contributions to a 401k or 403b Plan

In response to the current economic crisis caused by COVID-19, many companies are considering cost-savings measures to improve their companies' financial stability. One such cost-saving option is the reduction or suspension of company contributions to a company's 401k or 403b plan. The procedure for and the implications of such suspension will depend on the plan terms, including whether the contribution is intended to be a "safe harbor" contribution.

Source: Spotlightonbenefits.com, April 2020

A Close Look at ERISA 403b Plans, 2016

The study of 403b plans is complicated because plan sponsors span public and private sectors; also, some plans are subject to ERISA and some are not. ERISA 403b plan assets account for nearly half of the estimated total 403b plan assets. This 68-page report analyzes 403b plans covered by ERISA that also file Form 5500 Schedule H in 2016.

Source: Ici.org, April 2020

The CARES Act: Special Distributions to Qualified Participants

This article discusses a second provision of the Act that can help participants who are affected by the coronavirus (called "qualified individuals"). This is a special coronavirus-related distribution. Though discussed this in the context of 401k plans, the CRD provision applies to all qualified plans, 403b plans, and IRAs as well.

Source: Fredreish.com, April 2020

Seventh Circuit Upholds Dismissal of 403b Plan Lawsuit in Apparent Split With Third Circuit

Since the beginning of 2016, the ERISA plaintiffs' bar has filed nearly two dozen complaints targeting university-sponsored 403b plans. The majority of these lawsuits assert that plan fiduciaries breached their duties and engaged in prohibited transactions. In a significant development, the Seventh Circuit recently issued its decision in the case against Northwestern University and, in doing so, became the first court of appeals to uphold the dismissal of such claims in their entirety.

Source: Erisapracticecenter.com, April 2020

University Wins Appeal of 403b Suit

A federal appellate court has ruled in favor of the fiduciaries of a university 403b plan excessive fee lawsuit. This was the second of the 403b university excessive fee suits to go to trial and the second in which the university defendants prevailed.

Source: Ntsa-net.org, April 2020

IRS Extends Remedial Amendment Periods

The IRS has extended the remedial amendment period for 403b plans and pre-approved defined benefit plans. The IRS made the announcement on March 27.

Source: Asppa-net.org, April 2020

Retirement Plan Provisions of CARES Act

The third COVID-19 stimulus package has provisions regarding retirement plans, including expanded and penalty-free withdrawal rights, expanded loan rights, extended rights to repay loans and withdrawals, and a deferral of mandatory distributions.

Source: Wagnerlawgroup.com, March 2020

CARES Act Requires Immediate Decisions by Retirement Plan Sponsors

The CARES Act offers new avenues for defined contribution retirement plan participants to withdraw funds from their accounts to pay COVID-19-related expenses if their employer elects to open those avenues. Some of the largest 401k and 403b plan recordkeepers are forcing employers to make that choice on just a few days' notice.

Source: Spencerfane.com, March 2020

Deadlines Extended for 403b Plans

The IRS is extending the last day of the initial remedial amendment period for 403b plans from March 31, 2020, to June 30, 2020. Plan sponsors now have until June 30, 2020, to update their pre-approved and individually designed 403b plan documents.

Source: Irs.gov, March 2020

401k and 403b Hardship Distributions and COVID-19 Declared Disaster Areas

The Federal Emergency Management Agency has declared several disaster areas around the United States as a result of the spread of the coronavirus. Under final regulations issued in 2019, a federal disaster declaration has become one of the safe harbor reasons that qualifies a 401k or 403b plan participant for a hardship distribution, so it appears that plan participants may now be able to take a hardship withdrawal if they are laid off, put on an unpaid leave of absence or incur other expenses and losses on account of COVID-19.

Source: Beneficiallyyours.com, March 2020

Reminders About 403b Plans and Hardship Distributions

This is a reminder about two compliance issues that might need plan sponsor attention at this time: the March 31, 2020 deadline for correcting 403b plan documents and the need for operational compliance with hardship distribution procedural changes for 401k and 403b plans.

Source: Segalco.com, March 2020

Next Steps for 403b Plan Sponsors

Now that plan documents will be cleaned up, 403b plan sponsors can focus on strategic tasks such as plan design changes and on complying with new legislation.

Source: Plansponsor.com, March 2020

Reminders About 403b Plans and Hardship Distributions

This is a reminder about two compliance issues that might need plan sponsor attention at this time: the March 31, 2020 deadline for correcting 403b plan documents and the need for operational compliance with hardship distribution procedural changes for 401k and 403b plans.

Source: Segalco.com, March 2020

Legislation Would Allow 403bs to Invest in CITs

The bill introduced to Congress is designed to ensure public sector and nonprofit retirement plans have the same access to low-cost investments as for-profit retirement plans do.

Source: Planadviser.com, March 2020

Who Are the Top 403b Providers?

Small nonprofit businesses may struggle to find time to even look for a provider, much less handle tasks associated with a retirement plan. Often, this means defaulting to one of the larger 403b providers. The largest 403b providers are shown in this chart.

Source: Forusall.com, March 2020

Questions to Expect From Your 403b Plan Auditor

This document was prepared by the AICPA Employee Benefit Plan Audit Quality Center to provide examples of the types of questions that plan management may be asked by the plan's independent auditor. The plan auditor may also ask plan management other questions that are not on this list.

Source: Schneiderdowns.com, March 2020

IRS Announces Remedial Amendment Periods and Deadlines for Correction of 403b Plan Form Defects

The IRS issued Procedure 2019-39, which finalizes important changes to how sponsors and employers can ensure 403b plan compliance. The guidance is a welcome update from the Service, which initiated a regular system of remedial amendment periods for 403b plans in 2013, with the first period ending on March 31, 2020. This article reviews the most significant aspects of the guidance.

Source: Cov.com, March 2020

March 31st Deadline for 403b Plan Sponsors

If your organization sponsors a 403b plan for employees and has not adopted an up-to-date written plan document that complies with the applicable regulations, you have until March 31, 2020 to do so. Failure to do could cause substantial negative tax consequences for employees (and the organization) or cause the organization to incur substantial penalties to avoid those consequences.

Source: Belfint.com, March 2020

Are PEPs Available to 403b Plan Sponsors?

Are PEPs available to 403bs? The new PEP rules, do not apply to 403b plans. Thus small 403b plans are still somewhat limited in their opportunities to band together into a single plan to increase their purchasing power.

Source: Plansponsor.com, February 2020

The SECURE Act's 403b Custodial Account "Distribution" Does Not Create IRAs

The SECURE ACT introduced a concept that was not known well beyond a handful of 403b practitioners, which is the "distribution" of 403b individual custodial accounts from 403b plans. The lack of understanding of what this actually means has even led one commentator in a highly respected trade organization's technical piece to claim that this rule transforms 403b custodial accounts into IRAs.

Source: Businessofbenefits.com, February 2020

403b Plans and a Closer Look at Funds and Fees

To help Business Officers better understand their school's situation and evaluate whether employees are getting good value for their fees, PlanPILOT shares the findings of research on trends in plan fee trends and investment line-up design. Using publicly available IRS Form 5500 information, PlanPILOT examined more than 750 plans, with NBOA schools comprising roughly 20% of plans.

Source: Planpilot.com, February 2020

The SECURE Act and 403bs

The impact of the SECURE Act is well-known in many respects. Among the lesser-known impacts of the new law are those on 403b plans. A Feb. 11 NTSA webinar discussed them. Here is a summary.

Source: Ntsa-net.org, February 2020

Tips to Reduce Participant Count to Avoid Financial Audit Requirement

"We are a small nonprofit that sponsors an ERISA 403b plan. Until now our plan has been small enough to avoid the plan financial audit requirement, but, due to a lot of former employees retaining balances in the plan, we will now have more than 100 participants on 1/1/2020. We can use the 80/120 rule to avoid an audit for 2020, but I want to be proactive here to avoid crossing the 120-particpant threshold that would require audits in the future. Are there any steps I can take to reduce the number of participants in the plan?"

Source: Plansponsor.com, February 2020

2020 403b Retirement Plan Compliance Calendar

This plan compliance calendar for 2020 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 2020

SECURE Act: The New 500 Hour, Long Service Rule Does Not Apply to 403b Plans

The new rule amends Section 401(k)(2)(D) of the Code. At first glance, one may be under the mistaken impression that this is a rule which applies to all elective deferral plans, whether they be 401k plans, 403b plans or 457b governmental plans. But this impression is likely wrong: the statute, by its terms, clearly only applies to elective deferrals under 401k plans, not 403b plans.

Source: Businessofbenefits.com, January 2020

A New Year's "To Do" List for 403b Plan Sponsors

There is no shortage of concerns to occupy 403b plan sponsors and administrators. Some of these issues have been with us for some time, and some have been newly introduced by the SECURE Act. This is a short list of some of the more notable items that you might want to be thinking about in the new year if you sponsor or administer a 403b plan.

Source: Boutwellfay.com, January 2020

ERISA 403b Litigation Informs Plan Governance Practices

In the past three years, 403b plan sponsors have been subjected to the same ERISA fiduciary breach lawsuits that 401k plans have been fighting. 403b plan sponsors need help understanding their fiduciary duties, reviewing plan investment lineups and benchmarking fees.

Source: Planadviser.com, January 2020

403b Document Updates on 2020 Horizon

A new year has dawned, bringing into sharper relief that deadlines relevant to 403b documents are coming closer. March 31, 2020 is the deadline for 403b plans to update their plan documents for all current law.

Source: Ntsa-net.org, January 2020

Compliance, Fiduciary Duty Top 403b Plan Sponsor Priorities

Fulfilling responsibilities and increasing participation and deferral rates are the top priorities of 403b plan sponsors for 2020, the Plan Sponsor Council of America finds in a new survey. Survey respondents' top five priorities are noted.

Source: Napa-net.org, December 2019

403b Plan Restatement Deadline Fast Approaching

403b retirement plans are used by a wide variety of non-profits, including large university systems. These plans are required to be restated on IRS-approved documents in order to ensure they meet IRS requirements. The deadline to accomplish this, March 31, 2020, is fast approaching.

Source: Hallbenefitslaw.com, December 2019

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