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COLLECTED WISDOM™ on 403(b) PlansA 403(b) 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 403(b). 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.
When Must Discretionary Amendments to a 403b Plan Be Adopted?Abstract: The Remedial Amendment Period for 403b plans ends on March 30, 2020 for plan sponsors using IRS pre-approved 403b plan documents. One of the many issues relating to the RAP is determining what errors can be fixed during the RAP. In particular, what happens if a plan sponsor changed the operation of the plan but did not adopt an amendment reflecting that change? Source: Relius.net, September 2017
University of Pennsylvania Wins Dismissal of Case Against 403bAbstract: U.S. District Judge Gene E. K. Pratter of the U.S. District Court for the Eastern District of Pennsylvania dismissed all claims against the University of Pennsylvania and its vice president of human resources. The case had challenged multiple recordkeepers, multiple investment options and the use of retail share class funds. Source: Planadviser.com, September 2017
Collective Investment Trusts and 403b Plans: An UpdateAbstract: It may be possible for CITs to be offered in a governmental 403b plan (the limitations on being able to offer CITs in a private tax-exempt 403b plan remain applicable), if certain conditions are met. Source: Cammackretirement.com, September 2017
Pre-approved 403b Plans -- Effective Date AddendumAbstract: Adopting employers may use an effective date addendum to depict plan operational changes that have occurred at different points in time, which otherwise wouldn't be accurately reflected by the plan's general effective date. Source: Irs.gov, September 2017
What You Need to Know About 403b LoansAbstract: If you find yourself in a tight spot financially, then in some cases you might be able to borrow money from your 403b retirement account rather than taking an early distribution or using higher-interest debt. However, retirement accounts shouldn't be treated like bank accounts and one should borrow with caution. Source: 403bwise.com, September 2017
403b Plans Must Be Universally Available -- Is Yours?Abstract: Plan sponsors sometimes run into confusion regarding which employees may be excluded from making salary deferral contributions under their plan. This article discusses the rules to help clarify which employees may be excluded. Source: Eisneramper.com, September 2017
403b Litigation ConcernsAbstract: Over the last year, many colleges and universities have been the subject of lawsuits over the management of their 403b retirement plans. The complaints in the lawsuits have common threads and they identify patterns of high-risk practices. The courts have begun to weigh in on some of these issues, but their interpretations of the issues vary. Source: Sentinelgroup.com, September 2017
Are 403b Plans Evolving Fast Enough?Abstract: Traditionally 403b plan sponsors have been uncomfortable with change, at least much more so than their 401k plan sponsor counterparts. But while 403b plans have lagged in adoption of some plan improvements, they're striving to catch up. Source: Principal.com, September 2017
SEC Accuses 403b Plan Advisory Firm of Conflicts-of-InterestAbstract: The SEC has instituted a cease-and-desist order against Envoy Advisory. Envoy is accused of breaches of fiduciary duty, inadequate disclosures and compliance deficiencies. Most of its clients are small to medium-sized non-profit, faith-based organizations that sponsor ERISA Section 403(b) retirement plans for employees. Source: Planadviser.com, September 2017
How to Do a 403b Collective TrustAbstract: The University of California made news when it announced that it has found a way to apply the collective trust rules in such a way to make just such an offering to its 403b plan. For sophisticated state universities with large plans, or even those large consolidated K-12 plans, this could be a very real option. Source: Businessofbenefits.com, September 2017
Can 403b Plans Now Invest in Collective Investment Trusts?Abstract: The University of California becoming the first 403b non-church plan sponsor to offer collective investment trusts in its 403b plan. This development was somewhat surprising, given the fact that non-church 403b plans are generally restricted to investing in 403(b)(1) fixed/variable annuities and 403(b)(7) custodial accounts, and most CITs are neither. Source: Cammackretirement.com, September 2017
New Pre-Approved 403b Retirement Plan Restatement Period Now OpenAbstract: Sponsors of 403b retirement plans received welcomed news from the IRS in 2013 that it would allow them to adopt a pre-approved 403b plan. This means that for the first time, employers can adopt a written 403b plan document that the IRS has reviewed and approved. While more than three years have passed since the IRS announced this change, the time to take advantage of this new opportunity by adopting a pre-approved 403b retirement plan document has finally arrived. Source: Wnj.com, September 2017
403b Tax-Sheltered AnnuitiesAbstract: Revised 4-page IRS document that looks at common 403b plan mistakes and IRS products (including the 403b Fix-It Guide), services, and assistance to help you keep your 403b plan healthy. Source: Irs.gov, August 2017
More 403b Plans Offering Target-Date Funds as QDIAAbstract: Target-date funds grew in popularity among 403b plans last year as more plans offered this option as a qualified default investment alternative, according to a report just issued. Source: Pionline.com, August 2017
New Report Highlights 403b Retirement Plan TrendsAbstract: nonprofit organizations surveyed saw noticeable improvements in investment selections and auto-plan design features, such as increased default deferrals. The percentage of plans with a default deferral rate of more than 3 percent increased from 21.6 percent to 34 percent. In addition, organizations saw average employer contributions increase to 5 percent, up from 4.7 percent in 2015. Source: 401khelpcenter.com, August 2017
403b Plans Improving Plan DesignAbstract: In a survey of 608 non-profit organizations conducted by the Plan Sponsor Council of America, the council found these non-profits are making improvements to their 403b plans, particularly with respect to auto-plan features. Source: Plansponsor.com, August 2017
Why Some 403bs May Delay Form 5500 FilingAbstract: Many retirement plan sponsors, including 403b plan sponsors, file an extension of time to file their Form 5500s. This article discusses the two primary reasons. Source: Plansponsor.com, August 2017
New Jersey Considers 403(b) Disclosure BillAbstract: A bill that would require new disclosures in New Jersey, A5151, has been filed by Assemblywoman Amy Handlin, the Deputy Republican Leader of the Democrat-controlled Assembly. Source: Napa-net.org, August 2017
Why Do I Need to Restate My 403b Plan Document?Abstract: All organizations sponsoring 403b plans must now "restate" their plan documents onto an IRS approved document by March 31, 2020. Restatement on an IRS pre-approved plan gives the sponsoring organization reliance that the provisions in the pre-approved plan are compliant with IRS rules and regulations and that the plan assets are protected from taxation. Source: Qbillc.com, July 2017
New 401k Pre-Approved Document Rules Suggests Path to Address 403b Document ChallengesAbstract: Buried in that Rev Proc 2017-41 is something we have been looking for in the 403b space, which actually would help alleviate some of the concerns document drafters have with these long-standing plans. Source: Businessofbenefits.com, July 2017
Action Steps to Protect Your 403b PlanAbstract: Employers sponsoring 403b plans should take steps now to ensure compliance with Internal Revenue Service rules to protect plan participants against adverse tax consequences. Failures that are not timely corrected could result in the 403b plan's loss of tax-advantaged status, which would mean immediate taxation of all benefits to participants. This is a suggested action plan for employers. Source: Icemiller.com, July 2017
Non-ERISA 403b Plans Must Walk Fine Line to Avoid Losing ERISA ExemptionAbstract: Last month's Supreme Court decision, Advocate Health Care Network v. Stapleton, upholding ERISA exemption for church-affiliated pension plans was a reminder that not all benefit plans are subject to ERISA. Indeed, non-profit employers who sponsor 403b plans can choose to be exempt from ERISA. But they have to tread carefully. Source: Retirementplanblog.com, July 2017
Connecticut 403b Fee Disclosure Law to Take Effect Oct. 1Abstract: Beginning Oct. 1, 2017, administrators of 403b plans run by political subdivisions in the Nutmeg State will have to disclose to the plan's fiduciary any conflict of interest the service provider has with the plan. Source: Ntsa-net.org, July 2017
Texas Board Aims to Kneecap 403b Participant Choice, ProvidersAbstract: The Texas Teachers Retirement System Board of Trustees published a proposed rule in the Texas Register that could eliminate virtually all of the existing registered 403b products in the state from being actively marketed under new salary reduction agreements. Source: Ntsa-net.org, June 2017
Key Questions to Ask to Better Understand Your 403bAbstract: While 403bs share some similarities with the 401ks offered to corporate employees, these retirement plans are not identical and they can sometimes be confusingly complex in their fee structures and investment options. Source: 403bwise.com, June 2017
Adopting a New Pre-Approved 403b Document? It's a Good Time for a Plan Compliance ReviewAbstract: The restatement of a plan onto a pre-approved document is an opportunity to review the operation of the plan and to make sure that it is being administered in accordance with the terms of the document and applicable legal requirements. Conducting a periodic compliance review is a good idea even if the plan is not being restated, but a plan sponsor certainly wants to make sure that any current errors in the plan's operation are not carried over to a new document. Source: Boutwellfay.com, June 2017
Why the Fiduciary Rule Applies to IRAs but Not Non-ERISA 403bsAbstract: Aren't IRAs exempt from ERISA and thus any of ERISA's fiduciary provisions? And what about the many 403b plans that are also not subject to ERISA? If the fiduciary does not apply to those plans, why would it apply to IRAs? Source: Plansponsor.com, May 2017
403b Plan Design and OperationAbstract: This wide-ranging guide discusses the rules that apply when eligible tax-exempt organizations establish tax-sheltered annuities, custodial accounts, or retirement income accounts, as described in Section 403b of the Internal Revenue Code (403b plans). Source: Benefitsattorney.com, April 2017
Iowa Bill to Open Teachers' 403b Plan to More CompetitionAbstract: The bill requires the Iowa Department of Administrative Services to include up to 30 insurance and investment companies in the 403b plan so long as they are approved by the Iowa Insurance Division and registered with the federal Securities and Exchange Commission. Source: Ntsa-net.org, April 2017
PODCAST: Assessing and Improving Practices Regarding Investment of Retirement Plan AssetsAbstract: Verrill Dana Employee Benefits attorneys Eric Altholz and Chris Lockman provide a brief update on class action lawsuits alleging various breaches of fiduciary duties under ERISA pending against a dozen major universities. About 16-minutes. Source: Employeebenefitsupdate.com, April 2017
When to Expect 403b Pre-Approved PlansAbstract: The IRS was expected to issue approval letters for the model 403b plan documents in early 2017. However, the IRS has neither done so yet nor provided any update on when that may happen. Source: Plansponsor.com, March 2017
Consequences of Adopting an ERISA 403b PlanAbstract: Suppose a financial organization maintains a 403b plan document that is intended for use by an ERISA 403b plan. What are the consequences if the plan talks about being subject to the ADP test and certain nondiscrimination rules? Source: Ntsa-net.org, March 2017
A Road Map to 403b TransactionsAbstract: It is always good to review transactions, especially the definitions, since saying the wrong thing -- or worse, filling out the wrong form -- could prove disastrous for the plan participant. This is a review of common transactions for 403b plans. Source: Ntsa-net.org, March 2017
IRS Issues Guidance to Correct Defective 403b PlansAbstract: The IRS recently issued guidance permitting employers to retroactively self-correct 403b plan document failures through March 31, 2020. In short, employers sponsoring 403b plans have until March 31, 2020 to "clean-up" any plan document failures that occurred during the RAP, retroactive to January 1, 2010. Source: Icemiller.com, March 2017
Managing Critical 403b Issues through Proper Allocation of 3(16) and 3(21) Fiduciary ResponsibilityAbstract: Service providers are demonstrating their ability to customize their fiduciary services to their customers needs and -- just as important -- to their own capacity to provide selected services where they feel they can add value. The complex nature of handling 403b plans make these plans uniquely suited to customized fiduciary services. Source: Businessofbenefits.com, March 2017
IRS Updates 403b Self-Correction Procedure InfoAbstract: The IRS has updated the portion of its website that addresses how to self-correct defective 403b plan provisions during the remedial amendment period (RAP). Source: Ntsa-net.org, March 2017
Self-Correct Defective 403b Plan Provisions During the Remedial Amendment PeriodAbstract: 403b plan sponsors may self-correct plan provisions that violate the Internal Revenue Code Section 403b written plan rules by adopting plan amendments by March 31, 2020. This correction period is known as the "remedial amendment period." This is updated guidance. Source: Irs.gov, February 2017
2017 Compliance Checklist for Retirement Plans Subject to ERISAAbstract: As a retirement plan sponsor, you know how important it is to comply with ERISA and the ever-changing reporting and disclosure requirements mandated by the federal government. This checklist incorporates defined benefit, defined contribution, and ERISA 403b requirements and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made. Source: Prudential.com, February 2017
Remedial Amendment Period for 403b PlansAbstract: With the release of Revenue Procedure 2017-18, IRS has announced that the last day of the remedial amendment period is March 31, 2020. IRS plans to issue approval letters on the plans that have been submitted by March 31, 2017. Thus, if a plan has not satisfied the requirements of Section 403b with the prototype documents during the remedial amendment period but is amended by March 31, 2020 to satisfy those requirements, the plan will be considered to have satisfied those requirements for the entire period. Source: Strategicbenefitservices.com, February 2017
TIAA Lawsuit Puts the Spotlight on 403b Participant LoansAbstract: Participant loans from 401k plans have never been an employer favorite plan provision. Now participant loans from 403b plans have come into focus. It's in the form of a class action law suit recently filed by participants in the Was hington University 403b plan against TIAA. The Plaintiffs allege that TIAA violated several provisions of ERISA regarding the manner in which loans were administered. Source: Retirementplanblog.com, February 2017
403b's 'Limitation Year' Rules Demonstrate their 'Individual' NatureAbstract: Even now, as we hear rumblings that a "universal 401k" arrangement may once again be in the wings under any tax reform package considered by the new Congress, we again are reminded on how ingrained the differences are between the various types of retirement plans. There are reasons these plans, and the differences between them, exist. One of the most unusual differences, and hidden, differences between 403b plans and 401k plans is the striking fact that the 415 limit is an individual limit, not a plan level limit. Source: Businessofbenefits.com, January 2017
Long Awaited IRS Guidance on Initial 403b Remedial Amendment PeriodAbstract: The IRS has announced that the initial remedial amendment period for 403b plans to correct plan document defects in form will be open until March 31, 2020. This indicates that the first round of IRS advisory and opinion letters for 403b pre-approved plans will be coming out soon. Source: Groom.com, January 2017
The Birth of the First Ever IRS Pre-Approved 403b Plan DocumentsAbstract: On January 13, 2017, the IRS issued Revenue Procedure 2017-18 which provides Employers with a three-year remedial amendment period (RAP) that ends 3/31/2020. So now we are on our way, but we still have a number of items to receive from the IRS, namely more guidance and of course the actual approval letters. This is the first RAP for 403b documents in the history of these plans. Source: Ntsa-net.org, January 2017
Can Funds From an Inherited 403b Be Rolled Into an IRA?Abstract: Suppose an advisor has a 68-year old client whose uncle died, and she directly transferred his 403b account to an inherited IRA. She has her own 403b account and would now like to roll that 403b account into her inherited IRA. Is she permitted to do that? Source: Ntsa-net.org, January 2017
Correcting the "Best Guesses" on 403b Plan TermsAbstract: The IRS has announced the end of the first remedial amendment period for 403b plan documents, in Revenue Procedure 2017-18. The last day of that RAP will be March 31, 2020. Now what do you do with it? Source: Businessofbenefits.com, January 2017
Roth IRA vs 403bAbstract: You may have a 403b retirement plan available, but all income earners also have the option to save for retirement in a Roth IRA. So, which one makes more sense? This article explains how they work and the differences. Source: 403bwise.com, January 2017
403b Universal Availability RequirementAbstract: A 403b plan must satisfy the universal availability requirement with respect to elective deferrals. All employees of the employer must be eligible to make elective deferrals if any employee has the right to do so, with certain limited exceptions. Certain part-time employees may be excluded from eligibility to make elective deferrals. Source: Irs.gov, January 2017
Last Day of the Remedial Amendment Period for 403b PlansAbstract: Revenue Procedure 2017-18 provides that the last day of the remedial amendment period for Section 403b arrangements for purposes of Section 21 of Revenue Procedure 2013-22 is March 31, 2020. Source: Benefitsforward.com, January 2017
Hospital Target in 403b Lawsuit Starts Off the YearAbstract: Plan participants of Eseentia Health in Minnesota filed a class action lawsuit against the 403b plan sponsor claiming that the organization paid excessive fees to their recordkeepers. Experts are predicting an increasing number of lawsuits, especially against 403b plans which many consider low hanging fruit. Source: 401ktv.com, January 2017
Grandfathered 403bsAbstract: In this piece, Ellie Lowder tells us whether a client's 403b account in a public school district's plan in which no contributions have been made since 2003 qualifies as grandfathered and if the client can self-certify. Source: Ntsa-net.org, December 2016
A Glimpse Into 403b Plan TrendsAbstract: New 10-page Plan Sponsor Council of America survey highlights fiduciary awareness. PSCA's 2016 403b Snapshot Survey reflects responses from 281 not-for-profit organizations that currently sponsor a 403b plan. Source: Psca.org, December 2016
403bs Rethinking Adviser Choices Due to DOL Fiduciary RuleAbstract: A new survey by the PSCA highlights strategies some plan sponsors are taking to comply with the DOL rule including hiring a fiduciary adviser or switching to one (24%), changing investment lineup (19%), and reevaluating plan governance structure (15%). Source: Planadviser.com, December 2016
Year-End Action Items for 403bsAbstract: As 2016 comes to a close, what are the year-end 403b retirement plan action items that warrant special attention? Source: Plansponsor.com, December 2016
403b Advisors: What to Watch for in 2017Abstract: "Washington didn't see this coming," NTSA Executive Director Chris DeGrassi said about the results of the 2016 elections in a Dec. 12 webcast. Elections have consequences, he noted, and those could include actions that affect retirement plans and benefits, including 403bs and 457s. Source: Ntsa-net.org, December 2016
401k and 403b Plan Administrators GuideAbstract: New regulatory initiatives by the DOL, as well as a sharp spike in litigation against plan sponsors and third party recordkeepers, have underlined the importance of addressing plan administration in a proactive and comprehensive way. This 8-page guide is designed to help employers administer their 401k or 403b plans. Source: Jdsupra.com, December 2016
Voya Facing Lawsuit Over Stable Value FundsAbstract: A 403b plan participant is claiming that Voya set crediting rates for stable value funds lower than rates of return in order to make a profit. Source: Planadviser.com, December 2016
The University Fee Cases - Product of the Past, Possible Wave of the FutureAbstract: The suits resemble the dozens of "excessive fee" class actions against 401k plan sponsors and fiduciaries in recent years. But they are novel in many respects, especially because their targets, the fiduciaries of 403b retirement plans, have not been the focus of much ERISA fiduciary breach litigation until now. The new cases will test the essential structure of such plans and will determine whether fiduciary standards developing in 401k matters should be applied in the same manner in the 403b context. Source: Groom.com, November 2016
How to Fix a Retirement Plan at a School or NonprofitAbstract: This article aims to answer questions about how to identify the problems with a 403b plan and overcome them. It begins with general advice for people just getting started and then moves on to the more complex task of improving an existing plan. Source: Aspireonline.com, November 2016
What the 403b Excessive Fee Lawsuits Do Not ConsiderAbstract: Numerous lawsuits have been filed against large universities over alleged excessive investment and recordkeeping fees for their 403b plans. These lawsuits are in many ways clones of 401k lawsuits, but they completely disregarding some of the distinctions between the two plan types. Source: Plansponsor.com, October 2016
Is Your 403b or 401k Retirement Plan on Autopilot?Abstract: Over the last several months, plan participants of the 403b and 401k plans of many not-for-profit institutions filed class action lawsuits against their respective retirement plans, alleging excessive fees and mismanagement of retirement assets by the plan sponsor. This article suggests plan sponsors of both not-for-profit and for-profit organizations to review and ensure they're following best practices outlined here in an effort to meet their fiduciary obligations. Source: Plantemoran.com, October 2016
Legacy Investments in Higher Education: What Is a Plan Sponsor's Responsibility to Participants?Abstract: Even though a 403b sponsor may not have authority to move the legacy assets to a newly offered line-up of more prudently evaluated investments, they do have responsibility to communicate the value of these options to the participants who hold these legacy assets. Source: Fiduciaryplangovernance.com, October 2016
403b Plans Looking a Lot Like 401k Plans by Making Similar MistakesAbstract: With 403b plans now look similar to 401k plans, the mistakes that plan sponsors are making are, not surprisingly, also similar. Here are the mistakes the IRS sees most often on 403b examinations. Source: Retirementplanblog.com, October 2016
403b Lawsuits, Fees vs. ValueAbstract: The drumbeat of lawsuits against large 403b and qualified plan sponsors continues. The author of this article discusses the lawsuits against large 403b and qualified plan sponsors and what they entail. Source: Ntsa-net.org, October 2016
Can CITs Be Used in 403bs?Abstract: This question is illustrative of the differences of 403b plans from other plan types with respect to permissible investments. Generally, unless your 403b plan is a 403b(9) Retirement Income Account offered by a church, investments are restricted to two types: 1) 403b annuity contracts, and 2) 403b(7) custodial accounts, i.e., mutual funds. Source: Plansponsor.com, October 2016
403b Requirements Will Be Covered in IRS WebcastAbstract: Attendees will learn about hours of service; changes in employee status; student participation; and other 403b rules. Source: Planadviser.com, October 2016
403(b Universal Availability RulesAbstract: The nondiscrimination rule for eligibility to defer to a 403b plan is known as universal availability. Generally, everyone must be able to defer. This is a review. Source: Mhco.com, October 2016
ERISA 403b Lawsuits: Are Hospital Plans Sick and University Plans Dumb?Abstract: Regulatory changes enacted in the past decade have resulted in many more 403b plans becoming ERISA plans and the impact of the ERISA fiduciary requirements is now being felt. The two core fiduciary duties under ERISA are prudent investigation and always placing the interest of the participant first. It is apparent that many of these plans, including some very large plans, were unaware of these fiduciary duties. The result of that is increased litigation with more than a dozen lawsuits being filed just this year. Source: Unifiedtrust.com, September 2016
How to Prepare for a 403b Plan IRS AuditAbstract: A 13-page paper on how employers can prepare for an IRS Audit of their 403b and/ or 457(b) Plan, potential areas of focus during an IRS examination, and best practices for strengthening tax compliance. Source: Nagdca.org, September 2016
401k vs 403b: Differences in Investments, Compliance, and AdministrationAbstract: Today, many 403b plans have to follow similar ERISA compliance requirements, without the typical 401k benefits. So, whether you’re benchmarking your nonprofit’s current retirement benefit or growing out of your current solution, this article compares the main differences between 403b and 401k plans. Source: Forusall.com, September 2016
403b Compliance GuideAbstract: The 403b market has changed fundamentally over the last decade leaving many plan sponsors confused about their requirements in managing a qualified 403b plan, including potential testing obligations which are detailed here. Source: Multnomahgroup.com, August 2016
Isn't a 403b Plan Just Like a 401k Plan?Abstract: While both are forms of defined contribution plans and have accounts with balances that fluctuate with market changes, a 403b and a 401k Plan are different in many ways. This article has provides information on the differences. Source: Sdflaw.com, August 2016
A Few 403b Compliance QuirksAbstract: Some 403b plan compliance issues can arise due to idiosyncratic characteristics of 403b plans rather than statutory or regulatory requirements different from other defined contribution plans such as 401k plans. Source: Aon.com, August 2016
2016 PSCA Survey Highlights 403b Plan TrendsAbstract: The eighth annual benchmarking survey of 403b plans shows upward trends in deferral rates, employer matches and adoption of automatic enrollment. Source: 401khelpcenter.com, August 2016
Emory Added to List of Colleges Sued Over Retirement Plan FeesAbstract: Emory University is the latest university to be sued over alleged fiduciary breaches in the management of its DC plans. The lawsuit alleges a breach of fiduciary duties by causing participants in their 403b plans to pay excessive recordkeeping, administrative and investment management fees, and by retaining high-cost and poor-performing investment options. Source: Myajc.com, August 2016
ERISA Class Actions Filed Against Higher Education InstitutionsAbstract: Several ERISA breach of fiduciary duty class actions involving allegedly excessive retirement plan fees were filed this week against higher education institutions including colleges, universities, and medical schools. The plaintiffs in these cases primarily are current and former participants in section 403b retirement plans. These cases allege that plan fiduciaries made unreasonable and imprudent decisions that negatively affect the value of the plaintiff's retirement accounts. Source: Ballardspahr.com, August 2016
Beware the 403b Fee MonsterAbstract: Investment fees matter. A lot. Sometimes numbers alone don't convey how damaging high fees are to savings. Meet the Fee Monster. Source: 403bwise.com, August 2016
Why is K-12 403b Plan Design Stuck in the 90's?Abstract: The answer can be found by taking a closer look at the K-12 market. There are several factors that are NOT conducive to change in K-12, which is why 403b plans have largely stayed the same as they were 25 years ago. Source: Cammackretirement.com, August 2016
Duke Latest School Snared by Coordinated ERISA LawsuitsAbstract: Schlichter Bogard & Denton's coordinated attack on the retirement plans of prominent universities hit another school when the firm filed an ERISA class action against Duke University. Source: Bna.com, August 2016
Three Prominent Universities Sued Over 403b Plan FeesAbstract: Three prominent universities were sued on Tuesday, accused of allowing their employees to be charged excessive fees on their retirement savings. The universities -- the Massachusetts Institute of Technology, New York University and Yale -- each have retirement plans holding more than $3 billion in assets and are being individually sued by a number of their employees in cases seeking class-action status. Source: Nytimes.com, August 2016
Excessive Fee Litigation Hits Education SectorAbstract: The law firm of Schlichter, Bogard & Denton has now turned its attention to the education sector, filing separate class action lawsuits against three universities on behalf of over 60,000 employees in their defined contribution retirement plans, both 401k and 403b. Source: Ntsa-net.org, August 2016
Steps to Improve 403b PlansAbstract: For 403b plans that haven't yet embarked on fund and provider consolidation, there remain opportunities to build participant-friendly and cost-effective plan designs, a paper from Rocaton Investment Advisors suggests. Source: Planadviser.com, July 2016
The Unusual Matter of 403b EthicsAbstract: Author writes, "I was struck by the conundrum the 'mismatching' of the 403b rules can cause the pension professional, as well as the lawyer, registered rep and CPA, under their ethical rules." Source: Businessofbenefits.com, July 2016
403b Policy Loan's Continued Form 5500 Reporting ProblemAbstract: One of the more intractable issues with which ERISA 403b plans sponsors must deal with every year arises from the "policy loans" issued by insurance carriers under the 403b annuity contracts held under the plans. There is simply no good way to report these loans on the Form 5500, and the newly proposed Form 5500 changes do not address this ongoing gnat of an issue. Source: Businessofbenefits.com, July 2016
Overcoming Challenges in the 403b Tax Exempt MarketAbstract: IRS regulations have had a dramatic impact on 403b plans. This 8-page paper explores the challenges faced and enhancements made by many 403b plan sponsors in recent years and offer key takeaways for 403b plan sponsors going forward. Source: Rocaton.com, July 2016
Auditing Distributed 403b (and 401(a)) ContractsAbstract: The IRS took a significant step when it specifically recognized the termination of a 403b plans as being a "distributable event" in its 2007 regulations. This then permitted, for the first time, plans to distribute the assets of any 403b funds otherwise subject to distribution restrictions upon plan termination. This is all fine and dandy until you pay close attention to the details: how in the world do you effectuate an in-kind distribution of an annuity contract? Source: Businessofbenefits.com, July 2016
403b and the Fiduciary RuleAbstract: A close look at the DOL's fiduciary rule reveals interesting twists in the manner in which the rule affects (or doesn't) 403b plans, which simply do not apply to other participant directed defined contribution plans. Two really are the most obvious. Source: Businessofbenefits.com, June 2016
A Close Look at ERISA 403b Plans, 2013Abstract: This just published 60-page report focuses on ERISA 403b plans in 2013. It first analyzes 403b plans in the DOL's 2013 Form 5500 Research File. Focus then shifts to more than 4,000 audited 403b plans in the BrightScope Defined Contribution Plan Database, which have at least $1 million in plan assets and typically 100 participants or more. Detailed findings are highlighted. Source: Ici.org, May 2016
Helping 403b Clients Understand Universal Availability RulesAbstract: Failure to comply with universal availability (UA) rules is still one of the most common errors the Internal Revenue Service (IRS) finds in examinations of 403b retirement plans. Source: Planadviser.com, May 2016
Make Sure 403b Clients Do Not Lose Tax-Exempt StatusAbstract: The Internal Revenue Service is reminding tax-exempt organizations that many have a filing deadline for Form 990-series information returns in mid-May. Losing tax-exempt status can affect the ability to offer 403b plans. Source: Planadviser.com, May 2016
Best Practices for 403b PlansAbstract: 403bs are still catching up with plan design and fiduciary best practices including automatically enroll participants, automatically escalate deferrals each year, and re-enrollment. Source: Plansponsor.com, May 2016
How Does the DOL Fiduciary Rule Impact 403bs?Abstract: Michael A. Webb, Cammack Retirement Group, and David Levine, Groom Law Group, provide a "Cliffs notes" review on the new DOL fiduciary rule and how it affects 403b plan sponsors. Source: Plansponsor.com, April 2016
A Choice for Tax-Exempt Employers: 403b or 401k PlanAbstract: Tax-exempt organizations can have either a 403b or 401k plan, or both, which leads some to consider whether they should have one over the other. Key differences between 403b and 401k plans are summarized in a convenient table of contrasts. Source: Aon.com, April 2016
LLC Subsidiary Participation in 403bAbstract: Piece deals with the question of whether the employees of the wholly owned LLC subsidiary of a 501(c)(3) corporation participate in the 501(c)(3) corporation's 403b plan. Source: Plansponsor.com, April 2016
Fewer Schools Sponsor Traditional 403b PlansAbstract: It would be premature to signal the end of the traditional 403b defined contribution plan, but its long-term future as the favored retirement vehicle for higher education institutions appears to be fading. Source: Insurancenewsnet.com, March 2016
Whitepaper Released on Auto Enrollment in 401k and 403b PlansAbstract: Paragon Alliance Group has developed a new whitepaper that is designed to provide insight into the pros and cons of auto enrollment, and why it may or may not be suitable for all plan sponsors. Source: 401khelpcenter.com, March 2016
Guidelines Set for 403b Pre-Approved Plan Applications for LettersAbstract: IRS Employee Plans Division Rulings & Agreements Director Karen Truss on March 1st issued a memo to EP determinations employees that sets forth interim guidelines they are to use in processing 403b pre-approved plan applications for opinion and advisory letters regarding spousal benefit provisions. Source: Napa-net.org, March 2016
IRS Memorandum on Spousal Provisions in 403b PlansAbstract: The IRS has issued an internal memorandum on its ruling position on Opinion Letter applications on spousal provisions in Section 403b Plans. Source: Benefitsforward.com, March 2016
2016 Compliance ChecklistAbstract: The Compliance Checklist incorporates defined benefit, defined contribution, and ERISA 403b requirements and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made. Source: Prudential.com, February 2016
Preparing for an Employee Benefit Plan AuditAbstract: When it comes to an employee benefit plan audit, having the right information ready in a timely fashion is imperative for a smooth and efficient audit. Source: Belfint.com, February 2016
Tax Code Will Permit Merger of 403b and 401(a) Church PlansAbstract: An extraordinary and fundamental change was introduced to church 403b plans by the PATH Act. The Tax Code will now permit the merger of 401(a) and 403b plans of churches and the "transfer" of assets between the two types of plans will be permitted. Source: Businessofbenefits.com, January 2016
IRS Updates Materials for 403b Plans, IRAsAbstract: The IRS has made available updated materials relevant to annual filings that 403b plans and certain IRA holders must make, including Publication 571 on "Tax-Sheltered Annuity Plans (403b Plans)." Source: Ntsa-net.org, January 2016
After-Tax 403b Contributions: Too Good to Be True?Abstract: You may have read reports that the use of after-tax contributions can allow participants to contribute substantially more than the 402(g) limit of $18,000. And that such contributions can be immediately rolled over to a Roth IRA or possibly to a Roth 403b. Is this true? The answer, as is often the case, is maybe. Here are the basics. Source: Ntsa-net.org, January 2016
Changes to Voluntary Correction Program Compliance FeesAbstract: To encourage employers who sponsor 401(a) qualified retirement plans and 403b plans to correct plan failures through VCP, the IRS reduced the general VCP fees for most new submissions made on or after February 1, 2016. Source: Irs.gov, January 2016
2016 403b Fiduciary CalendarAbstract: An interactive look at the key 403b retirement plan compliance dates. Compliance dates and fiduciary milestones may vary from plan to plan, but this quarterly calendars provide a great starting point from which to create a schedule specific to your plan. Source: Fidelityinvestments.com, January 2016
2016 403b Retirement Plan Compliance CalendarAbstract: This 2016 Retirement Plan Compliance Calendar highlights critical compliance deadlines for 403b defined contribution retirement plans. Some of the deadlines apply only to particular plan types and are noted accordingly. Source: Cammackretirement.com, January 2016
2016 403b Plan Compliance CalendarAbstract: Here is a 403b Plan Compliance Calendar for 2016, listing many compliance deadline dates for 403b plans. Note that some of the deadlines only apply to particular plan types (such as ERISA plans) and are noted accordingly. Also note that plans with non-calendar plan years may be subject to different deadlines for a portion of the dates mentioned. Source: Ntsa-net.org, December 2015
An End-of-Year Checklist for 403b PlansAbstract: It is the time of year when those who work with 403b plans are making their end-of-year lists -- and checking them twice. To that end, the lawyers at Snell & Wilmer have prepared this end-of-year "to do" list for 403b plans. Source: Ntsa-net.org, December 2015
403b Market Snapshot: Boutique and Specialist Advisors DominateAbstract: Boutique defined contribution consultants and 403b-focused advisors are the "primary centers of influence" in winning new business in the trillion-dollar 403b market, according to a new report by Cerulli Associates. Source: Insurancenewsnet.com, December 2015
Fiduciary Responsibilities in 403b PlansAbstract: Of non-profit organizations that sponsor 403b retirement plans, only 60 percent are reviewing and evaluating the investment options in their plans, according a new survey from the Plan Sponsor Council of America that explores retirement plan trends among non-profit organizations. Source: Psca.org, December 2015
The 403b Lifetime Income Lesson for 401k PlansAbstract: Longer lives are reason to celebrate, but also reason for workers to ask: "Can I afford to be retired for 30 years or more?" Many defined contribution plans in the not-for-profit sector -- educational institutions, charities, hospitals, churches and the like -- have an answer to this question. Source: Pionline.com, November 2015
Fiduciary Regulations: A Cautionary Tale for 403b Plan SponsorsAbstract: Even with all the regulatory changes over the past nine years, the IRS and DOL have given non-profit organizations a lot of time to bring their 403b plans into compliance. However, it now looks like the tide may be shifting and we’re starting to see a tightening of the regulatory reins. Source: Benefitnews.com, November 2015
Correction for Mandatory Contribution Failures in 403b PlansAbstract: Author responds to this question, "We recently changed payroll systems, which resulted in a failure to withhold mandatory contributions from several employee paychecks until the error was discovered. I looked to the IRS guidance about the Employee Plans Compliance Resolution System, but there appears to be no mention of employee mandatory contributions in EPCRS at all. Am I missing something?" Source: Plansponsor.com, November 2015
MacGyverisms Can't Solve 403b Problems, but There Are Ways to Fix ThemAbstract: There are no "MacGyverisms" to fix 403b plan problems. But the IRS has something even better. It's called EPCRS which stands for the Employee Plans Compliance Resolution System, which is a correction program to fix mistakes and avoid the consequences of plan disqualification. Source: Retirementplanblog.com, October 2015
Fiduciary Process for Higher Education Institutions?Abstract: The path from the 403b plan of yesterday to a modern retirement benefit program is complex. This article focuses on fiduciary governance issues higher education institutions face as they transform their retirement plans to meet the needs of plan participants within the current market, administrative, and regulatory environment. Source: Captrustadvisors.com, October 2015
Study Quantifies the Value Advisors Bring to 403b ParticipantsAbstract: Plan participants who use an advisor can benefit from the experience both financially and emotionally, according to a new 16-page study of 403b plan participants by AXA. Source: Axa.com, October 2015
Fiduciary Regulations: A Cautionary Tale for 403b Plan SponsorsAbstract: The 403b industry has seen a lot of changes over the past nine years. However, even with all the regulatory changes, the IRS and the DOL have given non-profit organizations a lot of time to bring their plans into compliance. However, it now looks like the tide may be shifting and we're starting to see a tightening of the regulatory reins. Source: Principal.com, October 2015
Delivering Investment Advice: Key Differences between 403b vs. 401k PlansAbstract: Asset allocation models raise a whole different set of issues for the 403b investment adviser. This is because investments in 403b plans do not enjoy the same exemptions from securities laws, as do 401k plan investments. Source: Ntsa-net.org, October 2015
IRS Advisory Council 403b RecommendationsAbstract: The IRS maintains an advisory council of professionals which provides recommendations on, among other things, IRS programs and procedures which affect retirement plans. The ACT's Employee Plans Subcommittee took it upon itself this year to perform a substantial review of the IRS' 403b policies and procedures. Source: Ntsa-net.org, October 2015
The RFP Process...Checks and BalancesAbstract: The focus of this paper is to provide an outline of best practices a Plan Sponsor can utilize to undertake a Request for Proposal (RFP) process for 457(b), 401(a), 403b, grandfathered 401k. The information outlined in this document will apply to Plan Sponsors of all sizes. Source: Nagdca.org, September 2015
Lesser Known Differences between 403b and 401k PlansAbstract: The rules for 403b and 401k plans have become more similar, but a number of important differences remain. This article describes some of the less well known differences. Source: Aon.com, September 2015
Another EPCRS Update: Automatic EnrollmentAbstract: Revenue Procedure 2015-27 made several updates to the Employee Plans Compliance Resolution System, or EPCRS, found in Revenue Procedure 2013-12. This article examines the auto-enrollment changes to EPCRS to determine their impact on 403b/457(b) plan sponsors. Source: Cammackretirement.com, September 2015
A 403b Collective Trust? A Note of CautionAbstract: Collective trusts have seemingly become all the rage in plan investment circles. But what of a 403b plan purchasing collective trust interests? Well, as seems to be with all things 403b, there's trouble in the details. Source: Businessofbenefits.com, September 2015
Employee vs. Independent Contractor and Retirement Plan ImpactAbstract: Normally, 403b plan sponsors would not be directly concerned with employment law, since such issues often have little effect on employee benefits in general and retirement plans in particular. However, plan sponsors, ERISA and non-ERISA alike, should always keep a close eye on the area of worker classification -- namely, employee vs. independent contractor. This article outlines differences under current law between and employees and independent contractors and explain the impact on various types of retirement plans. Source: Ntsa-net.org, September 2015
The Difference Between QPSAs and QJSAsAbstract: These are two types of annuity benefits which are found in some types of ERISA 403b retirement plans that are often confused with one another despite the fact that they are two completely different types of benefits. Source: Pensionpulse.Blogspot.com, August 2015
Cracking the Code: Taxing Developments in 403b Plan ComplianceAbstract: The audits of Code Section 403b plans and Code Section 457 plans has increased dramatically in the last few years to the point where the IRS has now issued its "top ten list" of issues which tax-exempt entities need to focus on when sponsoring these types of plans. Article reviews the top seven 403b issues. Source: Mwe.com, August 2015
SPARK Institute Best Practices for 403b and Related Retirement Plans Information SharingAbstract: These "Best Practices" set forth: 1. The data elements for information sharing between 403b plan employers or employer representatives and vendors. 2. A basic file convention layout. 3. The frequency of data transmissions. 4. An approach for sharing and transmitting data on a transaction or daily basis when agreed upon by both the sending and receiving parties. Source: Sparkinstitute.org, August 2015
The Special 15-Year 403b Catch-Up Contribution: How Does It Really Work?Abstract: Plan sponsors must make sure that they have the historical information necessary to compute the maximum available 403b catchup for each employee. If historical information is not available due to permissibly excluded contracts, then the plan sponsors should consider the wisdom of offering a plan provision that they cannot administer accurately, due to lack of information. Source: Belfint.com, August 2015
How ERISA Has Changed the Game for NonprofitsAbstract: Since coming under ERISA jurisdiction in 2008, 403b retirement plans are now subject to a litany of compliance checks and balances. This article provides an overview of the biggest challenges ERISA has instigated for nonprofits, and how these organizations are reacting to managing their retirement plans effectively and efficiently in light of this shift. Source: Rolandcriss.com, August 2015
NTSA Conference Presentation Sheds More Light on DOL's Fiduciary RuleAbstract: During the first round of breakout sessions at the 2015 NTSA 403b Summit in Nashville, an expert panel led a lively and engaging discussion about the Department of Labor’s re-proposed fiduciary rule, and the potential impact on common business practices. Amy L. Simonson summarizes the who, what, when, where, why and how of the proposed rule. Source: Ntsa-net.org, August 2015
IRS Audits of 403b PlansAbstract: Article reviews the top seven issues identified during IRS examinations of 403b plans. Source: Mhco.com, July 2015 401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC. | |||||||
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