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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.

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IRS Updates Operational Compliance List for 403b Requirements

The IRS has updated the operational compliance list relevant to 403b requirements effective during the calendar year. The update adds a discussion of provisions that became effective in 2022. The IRS intends the list to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements.

Source: Ntsa-net.org, February 2023

What Deadlines Apply to 403b Plans

Whether you are a school business official or a human resources employee of a nonprofit organization, chances are that you are juggling so many responsibilities that your time is at a premium. Knowing deadlines for amending your employer's 403b plan document helps keeps that plan compliant.

Source: Voya.com, February 2023

SECURE 2.0 Act: Optional Treatment of Employer Matching or Non-elective Contributions as Roth Contributions

Historically, employers were not permitted to provide employer matching or nonelective contributions in their 401k, 403b, and governmental 457b plans on a Roth basis. These types of employer contributions were allowed only on a pre-tax basis. Under a new provision of the SECURE 2.0 Act, effective immediately, plans may now allow participants to elect to receive matching and nonelective contributions on a post-tax basis.

Source: Schneiderdowns.com, January 2023

Early Excessive Fee Case Nears Settlement

The parties in one of the first university 403b excessive fee suits -- by participant-plaintiffs represented by the Schlichter law firm -- have come to terms on the eve of going to trial. The suit, filed in August 2016, involved two plans sponsored by the University of Southern California.

Source: Ntsa-net.org, January 2023

7th Circuit Poised to Revive Northwestern ERISA Suit

The U.S. Court of Appeals for the Seventh Circuit appeared receptive to reviving an ERISA class action suit against Northwestern University, claiming mismanagement of the workers' 403b plan, albeit on a limited scale. The employees alleged that Northwestern breached their fiduciary duties under ERISA by allowing too many investment options, causing them to pay excessive fees. In addition, they claimed that including the more expensive share classes of mutual funds precluded their access to lower-fee institutional share classes of mutual funds.

Source: Hallbenefitslaw.com, January 2023

Proposed IRS Regulations Would Make Permanent the Availability of Remote Spousal Consent Elections

On December 27, 2022, the IRS issued proposed regulations permitting remote witnessing, in the presence of either a notary public or plan administrator, as an acceptable alternative to the physical presence requirement if certain conditions are satisfied.

Source: Wagnerlawgroup.com, January 2023

Should We Continue to Refer to Our 403b Plan By an Outdated Name?

Article response to this question, "I work in employee benefits for a health care entity, and I noticed that our 403b plan is named the XYZ Hospital Tax Deferred Annuity Plan, even in the plan document. Our plan hasn't even had annuities for several years (we converted to an all-mutual-fund platform a decade ago) and we also now have Roth 403b account in addition to traditional tax-deferred accounts. Is there any reason that we should continue to refer to our plan by a name that is so outdated and potentially confusing to participants?"

Source: Plansponsor.com, January 2023

Secure 2.0's Unresolved 403b CIT Securities Law Issue

One of the more curious circumstances under SECURE 2.0 arises from the Acts Section 128, which purports to permit 403b plan custodial accounts to invest in interests in Collective Investment Trusts, referred to as "81-100" group trusts in the Act. But, as the Senate Finance Committee noted in its own Committee Report to the EARN Act, "In order to permit 403b plans to participate in a group trust, certain revisions to the securities laws will be required." Those necessary revisions, however, never made it into SECURE 2.0.

Source: Businessofbenefits.com, January 2023

Court Dismisses 403b ERISA Claim Against Employer, but Not the Plan's Adviser

The U.S. District Court for the Northern District of Texas filed a partial order on December 29, 2022, ruling on summary judgment motions from both defendants. District Judge Brantley Starr ruled that the plaintiffs have standing to bring the suit, but Legacy Counseling Center is exempt from the ERISA requirements in this case. Peveto Financial Group, on the other hand, cannot be held liable for IRS corrective damages, yet can still be held liable for not permitting wider plan participation if they are found to be a fiduciary.

Source: Planadviser.com, January 2023

After Committee Change, SECURE 2.0 Does Not Allow CITs in 403bs

Disregard any coverage to the contrary: SECURE 2.0, as passed, does not permit 403b plans to invest in collective investment trusts. House Financial Services had "consumer protections" concerns. The required amendments to securities laws did not make it into the final SECURE 2.0 Act.

Source: Planadviser.com, January 2023

Secure 2.0: Congress Enacts Wide-Ranging Changes to 401k and 403b Plans

As part of its mammoth 2022 year-end spending bill, Congress passed Secure 2.0, which makes dozens of modifications to the laws governing retirement savings. These revisions, almost all of which were driven by concerns that Americans are failing to accumulate sufficient resources to fund their retirement, build on changes Congress made in 2019 in the SECURE Act. This is a list of key provisions in Secure 2.0 that employers with existing 401k and 403b plans need to pay attention to.

Source: Blankrome.com, January 2023

What Does SECURE 2.0 Mean for 403b Plans?

The SECURE 2.0 Act makes several changes to 403b plans, aiming to standardize them with 401k plans to give 403b plan sponsors and participants broader retirement saving options. Experts weigh in on how SECURE 2.0 may make 403b plans operate more like 401ks, including being able to participate in PEPs.

Source: Planadviser.com, December 2022

How Does One Implement a Student Loan Matching Benefit?

The SECURE 2.0 Act passed Congress and would allow employers to offer matching 401k, 403b, 457b, and SIMPLE IRA contributions if the participant elects to pay down student loans instead of contributing to a retirement plan. This option would be available starting after December 31, 2023. How should plan sponsors go about implementing this provision, if they choose to?

Source: Planadviser.com, December 2022

IRS Expands Determination Letter Program for 403b Plans

IRS is expanding its determination letter program for individually designed plans to include many 403b plans. Rev. Proc. 2022-40 provides the first opportunity for 403b plan sponsors to get a determination letter, which gives assurance that their plan documents comply with all applicable IRC and regulatory requirements. IRS is also updating the program to incorporate changes for qualified plans made since the program's overhaul in 2016.

Source: Mercer.com, December 2022

New Determination Letter Program for 403b Plans

The IRS recently issued Revenue Procedure 2022-40, which permits the submission of determination letter applications for individually designed 403b plans used by certain public schools, churches, and charities. Beginning June 1, 2023, plan sponsors maintaining individually designed 403b plans will be able to request a determination letter for initial plan qualification, upon plan termination, or for other limited circumstances to be announced by the IRS.

Source: Buck.com, November 2022

What Deadlines Apply to 403b Plans

Whether you are a school business official or a human resources employee of a nonprofit organization, chances are that you are juggling so many responsibilities that your time is at a premium. Knowing deadlines for amending your employer's 403b plan document helps keeps that plan compliant. Here is a good review.

Source: Ntsa-net.org, November 2022

IRS Signals Employers Will Have Less Discretion Over Discretionary Match

Employers offering discretionary matching contributions have less discretion to set the terms of those contributions outside of plan documents. The IRS recently noted that 403b plan documents submitted for preapproval must include provisions on the computation period and allocation formula for a discretionary match. This likely means that going forward, all employers using preapproved documents for their defined contribution plans -- 403b and qualified plans -- should expect to specify these terms in newly adopted documents.

Source: Mercer.com, November 2022

New 403b Plan Determination Letter Program

Continuing a recent trend to more closely align 403b plans with tax-qualified 401k plans, the IRS recently issued Revenue Procedure 2022-40 to create a limited determination letter program for individually designed 403b plans. For the first time, 403b plan sponsors can request an IRS determination letter for their "individually designed" 403b plans on initial plan qualification, on plan termination, or in other limited circumstances to be established by the IRS.

Source: Groom.com, November 2022

IRS Provides Extension to Certain Retirement Plan Amendment Deadlines

On Aug. 3, 2022, the IRS issued Notice 2022-33 which extends the deadlines for certain plan sponsors to adopt amendments under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and the Bipartisan American Miners Act of 2019 (Miners Act) until Dec. 31, 2025. This extension applies to non-governmental qualified retirement plans, 403b plans as well as collectively bargained plans, and IRAs.

Source: Bsk.com, November 2022

New IRS Revenue Procedure for 403b Plans

The IRS has now issued Revenue Procedure 2022-40, allowing the sponsor of an individually designed 403b plan to submit a request for a determination letter. Under this program, for the first time, an individually designed 403b plan will be able to rely on the IRS' approval that the form of the document meets all IRS requirements.

Source: Boutwellfay.com, November 2022

Plan Approval Program Expands to 403b Retirement Plans

The IRS and Treasury will let the churches, public schools, and charities that have 403b retirement plans take advantage of some of the same individually designed retirement plan determination letter program used by qualified retirement plans, beginning in June 2023.

Source: Thetaxadviser.com, November 2022

A Boon for the 403b: IRS Expands Tax-Favored Approval Process

The IRS announced the expansion of one of its programs for approving retirement plans, allowing 403b plans -- which are used by certain public schools, churches, and charities -- to apply for the same tax-favored treatment as qualified retirement plans. As of June 2023, the IRS will allow 403b plans to use the same individually designed retirement plan determination letter program used by 401ks.

Source: 401kspecialistmag.com, November 2022

403b Plan Fiduciaries Fend Off Excessive Fee Claims

Yet another excessive fee suit has been dismissed for failing to make a "plausible" case. The plaintiff, in this case, is Kaila Gonzalez, a participant in the Northwell Health 403b Plan, who filed suit against Northwell Health, Inc., the Northwell Health 403b Plan Committee, and 10 other unidentified Plan fiduciaries. She alleged that the defendants here allowed the Plan to be charged excessive recordkeeping fees and imprudently retained certain investment options in the Plan's investment menu in violation of ERISA.

Source: Ntsa-net.org, October 2022

Among Higher-Ed, DC Plans Viewed as Top Benefit for Attracting Talent

Findings from a bi-annual survey of retirement plan decision-makers in the higher education sector show that the DC plan is the No. 1 most important benefit for attracting and retaining talent. What's more, 90% also agree that a DC retirement plan helps attract high-quality employees, and 87% agree it helps retain high-quality employees.

Source: Napa-net.org, October 2022

Yale 403b Plaintiffs Move Ahead to Jury Trial

Plaintiffs in one of the first university 403b suits to be filed will get their day in court. The suit against Yale University was one of the first to be filed in this area by Schlichter Bogard & Denton LLP in August 2016. As has been the case with most in this genre, it alleged that employees paid excessive recordkeeping fees in addition to selecting and imprudently retaining funds which the plaintiffs claim have historically underperformed for years.

Source: Napa-net.org, October 2022

SECURE 2.0's 403b PEP Rules Will Be, Well, Different

With so much change continuing to be in the air, it seems all too rare to be able to take the opportunity to step back to broadly reflect on all of these moving pieces. The changes from CARES and SECURE, for example, are just working their way through the system, and now we expect to see SECURE 2.0 bring several further changes to the market. 2.0 is fascinating in many ways, especially given that right now it is just a mashing together of three different legislative efforts- plus some.

Source: Businessofbenefits.com, October 2022

PSCA Releases 2022 403b Survey

As employers everywhere continue to recover from the long-term impacts of the COVID-19 pandemic and compete for talent, employer contribution rates to 403b plans rose almost 24% year-over-year from 4.6% in 2020 to 5.7% of gross annual pay in 2021, according to an annual 403b Plan Survey from the Plan Sponsor Council of America, part of the American Retirement Association.

Source: Psca.org, October 2022

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


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