COLLECTED WISDOM™ on 403(b) Plans
A 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).
Best Practices for 403(b)'s Subject to Fee Disclosure Rules - Summary: During a workshop at the National Tax-Sheltered Accounts Association latest 403(b) Compliance Resolution Summit, industry representatives identified fee disclosure issues unique to 403(b) plan sponsors and discussed best practices.
Source: Plansponsor.com, January 2012.
403(b) Compliance Summit Report Released - Summary: The compliance summary report identities problem areas where best practices need to be established and features recommendations for current issues like fee disclosure. With the assistance of the American Institute of Certified Public Accountants, thoroughly discussed problems with 403(b) ERISA plan audits. Report also includes check lists, glossaries, and forms that are essential in understanding and adopting the best practices.
Source: ASPPA, January 2012.
403(b) Plans Show Continued Improvement Despite Shaky Economy - Summary: Despite prolonged economic instability, 403(b) plan sponsors are forging ahead with a variety of plan improvements, such as increased use of automatic enrollment, greater participant education, and refined investment lineups.
Source: CCH, January 2012.
Two Classes of Annuity Providers Do Not Violate § 403(b) Universal Availability Requirement - Summary: In Private Letter Ruling 201142033 (July 25, 2011), the IRS ruled that the IRC § 403(b) universal availability requirement was not violated merely because (i) a university system made available two classes of annuity providers and (ii) some employees could access both classes of providers, and other employees could access only one class.
Source: Sutherland Asbill & Brennan LLP 
, November 2011.
Number of Choices in 403(b) Market Impacts Participation - Summary: 403(b) plans provide an important method for school district employees to save for retirement. But a lack of choice in 403(b) retirement plans results in reduced participation among school district employees, according to a new report by the American Society of Pension Professionals & Actuaries.
Source: Benefitspro.com, October 2011.
The Impact of Reduced Choice on Participation in 403(b) Plans - Summary: This paper examines the impact of participant choice in 403(b) plans. It looks at the extent to which school district employees want choices in their 403(b) plans and whether providing those choices is beneficial to them.
Source: ASPPA , October 2011.
New Study Provides 403(b) Market Overview - Summary: Sponsors in all segments of the 403(b) market are looking to their providers as 403(b) partners and experts. Providers offering solutions to help ease plan administration and cost will have a competitive edge. Government regulation and more transparent fee reporting are driving both innovation and consolidation.
Source: 401khelpcenter.com, September 2011.
2011 403(b) Plan Buyer's Guide - Summary: As 403(b) sponsors continue to perfect their processes and prepare for more regulations, they seek help from providers, advisers, legal counsel, and actuaries. This survey provides a listing of various types of providers to 403(b) plans, including the services each one provides as well as information on which 403(b) market segments each one.
Source: Plansponsor.com, August 2011.
Fixing 403(b) Plan Mistakes - Summary: Sponsors seem to be having problems with implementing plan features unique to 403(b) plans. The IRS is also seeing excess contributions for Internal Revenue Code 415 Annual Contribution Limitations.
Source: Plansponsor.com, July 2011.
New 403(b) Survey Shows Resilience of Sponsors and Participants - Summary: Despite a potentially crushing recession and a spate of complex new regulations, the 403(b) retirement plan system appears to be healthier than ever. That is the findings of the just-released 2010 403(b) Plan Survey from the Profit Sharing/401k Council of America. Survey highlights revealed.
Source: 401khelpcenter.com, May 2011.
How Business Officers Use Expanded Fiduciary Responsibilities to Improve Benefits - Summary: Even sophisticated school business officers can feel unpleasantly surprised to learn that insurance companies and mutual funds do not accept fiduciary responsibility for 403(b) plan investments. As for executing that responsibility themselves, business officers may not be confident about exercising necessary control over plan investments and fees. With the right type of support, however, a school can efficiently satisfy its fiduciary responsibility and act appropriately in the best interests of the plan and its participants.
Source: 403bwise.com , May 2011.
403(b) Terminations Under Revenue Ruling 2011-7: Establishing the Base - Summary: The IRS issued its long awaited guidance on the termination of 403(b) plans, with Revenue Ruling 2011-7. A number of practitioners are likely to be disappointed by the limited scope of this ruling. However, it establishes a fundamental structure within which to work, and clarified things at which we could only guess in the past.
Source: Business of Benefits, February 2011.
403(b) Plans – Taxability of Certain Annuity Contracts - Summary: The issue covered by the IRS here is whether a 403(b) retirement plan that takes the actions described has been terminated in accordance with the rules of § 1.403(b)-10(a) of the Income Tax Regulations and whether distributions made to participants or beneficiaries in connection with termination of the plan are included in gross income.
Source: IRS , February 2011.
Correcting Employer Eligibility Failures in 403(b) Arrangements - Summary: The IRS has reminded sponsors of Section 403(b) arrangements how to correct failures resulting from the ineligibility of the plan sponsor.
Source: Benefits Forward, February 2011.
Audits of 403(b) Plans for Form 5500s - Summary: ASPPA and NTSAA submitted supplemental comments to the U.S. Department of Labor requesting additional transitional relief with respect to the Form 5500 audit requirements for 403(b) plans.
Source: ASPPA , February 2011.
NTSAA Issues 403(b) Compliance Resolution Summit Report - Summary: The National Tax Sheltered Accounts Association just released this 16 page report from their second annual 403(b) Compliance Resolution Summit last May in Chicago.
Source: ASPPA , December 2010.
Automatic 403(b) Toolkit - Summary: An automatic 403(b) plan automatically enrolls employees at a set contribution rate. It requires no initial action by employees. They are in the plan unless they opt out. In an automatic plan, contributions go into a pre-selected investment fund. Also, employers may set contributions to increase automatically each year. This 34 page toolkit provides helpful information and communications samples to help plan sponsors automate their 403(b) plan.
Source: Retirement Made Simpler , November 2010.
Impact of the 408(b)(2) Regulation on ERISA 403(b) Plans - Summary: For 403(b) service providers that do not regularly deal with ERISA plans, the regulation may require a significant degree of change in how they do business. And even for those that have a regular ERISA clientele, it will have an impact, especially for producers who have not previously established a practice of describing their services and compensation in writing.
Source: ASPPA , October 2010.
A Guide to Best Practices for 403(b) Plan Fiduciaries - Summary: Today, nonprofit plan sponsors need to have more oversight and exert more control over their 403(b) program than historically has been the case. This 16 page paper provides an overview of three important areas of the law affecting 403(b) plans: Fiduciary Duties, Form 5500 Reporting and Audit Requirements, and Final IRS Regulations.
Source: MassMutual , October 2010.
A 2010 Wakeup Call for 403(b) Fiduciaries - Summary: The purpose of this paper is to give a brief overview of the changing 403(b) environment, alert plan sponsors to the need for increased fiduciary awareness and suggest steps they can take to protect themselves, their board members, other fiduciaries and ultimately, their participants.
Source: The Standard , September 2010.
Best Practices for 403(b) Plans Working with Non-Compliant Vendors - Summary: Plan sponsors generally depend on their 403(b) plan service providers to collect, maintain and manage participant information, and to suggest ways to address certain compliance issues. The purpose of these Best Practices are to identify options for plan sponsors when an investment provider is not able or is unwilling to share participant data.
Source: SPARK Institute , September 2010.
Best Practices for Multiple Vendor 403(b) Plans - Form 5500 Aggregation - Summary: ERISA covered 403(b) plans that use multiple vendors must gather and aggregate data from their vendors in order to complete Form 5500. This aggregation has created unique challenges. These best practices were developed to address the challenges.
Source: SPARK Institute , August 2010.
Exercising Fiduciary Control Over the Investment Menu in 403(b) Plans - Summary: Under ERISA 403(b) plans, the plan sponsor and other fiduciaries are responsible for the management of the plan and its investments in accordance with the demanding standards of ERISA Section 404. There are four central duties under this provision, which require fiduciaries to act.
Source: Plansponsor.com, August 2010.
The 403(b) Market - Summary: This chart illustrates the distribution of investments in the 403(b) market as of December 31st of each year. The numbers represent billions of dollars invested.
Source: 403bwise.com, June 2010.
2010 403(b) Plan Survey Highlights - Summary: Findings of the just-released 2010 403(b) Plan Survey from the Profit Sharing/401k Council of America indicate that plan sponsors are adjusting well to the new regulations imposed by the IRS and that participation and retirement account balances remain high. This page contains highlights of the survey.
Source: Profit Sharing/401k Council of America, May 2010.
PODCAST: 403(b) Plan Update - Summary: Kevin Kidwell of American United Life Insurance Company discusses trends among 403(b) plans and plan sponsors, who are striving to keep up with fiduciary responsibilities.
Source: Plansponsor.com, April 2010.
PODCAST: Advisors Guide to Helping 403(b) Clients Manage Their ERISA Challenges - Summary: This is a podcast which detailed the steps an advisor can take in assisting their clients in winding their way through the maze of ERISA issues that 403(b) plans need to deal with. It also includes some thoughts on moving a plan from non-ERISA status to ERISA status. Podcast is just over 45 minutes long.
Source: The Standard, March 2010.
403(b) Retirement Plan Audits - Frequently Asked Questions - Summary: The AICPA 403(b) Plan Audit Task Force has prepared these questions and answers to assist plan auditors and plan administrators in implementing the DOL financial statement audit requirements for section 403(b) retirement plans that are subject to ERISA.
Source: Business of Benefits Blog , March 2010.
Guidelines for Multiple Vendor 403(b) Plans - 2009 Form 5500 Aggregation - Summary: 2009 Form 5500 aggregation across multiple investment-provider vendors is expected to create unique challenges. As such, these 2009 Guidelines were developed exclusively to address the challenges of completing the 2009 Form 5500.
Source: The Spark Institute , January 2010.
Bringing Higher Education 403(b) Plans Up-to-Date with Current ERISA Fiduciary Best Practices - Summary: This white paper, released by Diversified Investment Advisors, Inc., was developed to help higher education plan sponsors understand when and how ERISA applies to 403(b) plans, as well as provide best practice recommendations for complying with fiduciary requirements.
Source: Groom Law Group , December 2009.
Addressing 403(b) Plan Issues - Summary: This is the first of a two part article addressing issues that private sector 403(b) sponsors need to be concerned about, with some recommendations on how to deal with them.
Source: Drinker Biddle & Reath LLP, PC, December 2009.
Impact of Economic Conditions on 403(b) Plans - Summary: PSCA's "Impact of Economic Conditions on 403(b) Plans" reflects responses from 609 not-for-profit organizations that currently sponsor a 403(b) plan. Data in this survey is often categorized by plan size. Plan size is determined by the number of active participants in the organization's plan.
Source: Profit Sharing/401k Council of America , December 2009.
403(b) Plan Compliance Checklist - Summary: This is a checklist to help determine if your ERISA-covered 403(b) plan is in compliance, and where your exposure may lie in the event of an audit.
Source: Diversified Investment Advisors , November 2009.
403(b) Universal Availability - Summary: The universal availability requirement applies to all 403(b)s, except for church plans. The universal availability rule permits all the right to defer and thus does not favor HCEs; and because the ability to make deferrals is universally available, there is no ADP test.
Source: McKay Hochman, November 2009.
IRS Publishes Sample 403(b) Prototype Document Language - Summary: The draft information package contains samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code applicable to section 403(b) plans, and as provided in Announcement 2009-34, interested persons are invited to submit comments to the IRS on the sample plan provisions.
Source: Plansponsor.com (free registration may be required), April 2009.
403(b) Action Plan Workbook - Summary: To assist plan sponsors and financial advisers Benefit Plans Plus offers complementary 403(b) Action Plan Workbook to serve as in initial reference guide and information source to work toward IRS compliance.
Source: Benefits Plans Plus , December 2008.
New Survey Fills the Gap in 403(b) Benchmarking Data - Summary: PSCA has released their 2008 403(b) Plan Survey. This new survey is the first of its kind, providing comprehensive information on 403(b) plan practices.
Source: 401khelpcenter.com, December 2008.
403(b) Plans Technical Questions and Answers - Summary: The SPARK Institute received a significant number of questions regarding the Best Practices from companies that are actively developing systems to follow them. They have prepared this 403(b) Plans Technical Questions and Answers to address many of the questions.
Source: SPARK Institute, December 2008.
403(b)/401k Comparison Chart - Summary: This is a chart that compares code §403(b) with code §401k plans.
Source: McKay Hochman, December 2008.
403(b) Regulations: Understanding the Changes - Summary: This resource provides the 403(b) plan sponsor with a review of the new IRS regulations, answers to commonly asked questions and concerns, and a game plan for streamlining your compliance process.
Source: The Standard , September 2008.
Fixing Your 403(b) Plan: Adopting a Best Practices Approach - Summary: The IRS has issued final 403(b) regulations, the first comprehensive guidance in 43 years. These new regulations offer an opportunity to create a better retirement plan for all by adopting a best practices approach.
Source: The Standard , September 2008.
Final 403(b) Regulations -- How They Affect Plan Sponsors - Summary: Sponsors of 403(b) plans—typically school districts, higher education institutions, health care providers, and charitable organizations—will soon have increased responsibilities for overseeing investments, transfers, documentation, administration, and participants' disclosures.
Source: Vanguard, September 2008.
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