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Category Archives: 403(b)

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Trouble Ahead for the Non-ERISA 403(b) Plan*

Posted in 403(b)
* Except,of course for governmental 403(b) plans and non electing churches…… It is difficult to maintain the non-ERISA status of a 403(b) arrangement. Those who wish to do so really have to work at it, with the irony being that “working at it” just may be what triggers ERISA status for those plans. In essence, … Continue Reading

Rome was not built in a day… build internal controls one step at a time

Posted in 403(b)
After many years of wading through a variety of retirement plan platforms and services, I can honestly say “I will never stop being fascinated”.  I do believe, with 100% certainty, that I will never be able to anticipate every possible compliance issue.    However, with as much certainty, I can say “processes, procedures and effective internal … Continue Reading

The “Balancing Problem” in Reporting “403(b) Policy Loans” on the Form 5500 Schedule H

Posted in 403(b)
The 403(b) annuity "policy loan" is much different. The cash from the loan is obtained from the insurer's general account, and no investment funds are ever liquidated from the participant's annuity contract. An amount equal to the value of the outstanding value of the loan remains as a "restricted" investment held in one of the annuity contract's investment funds, or in a separate account specially designed to pay a special rate of interest on that investment. The participant has no access to those funds, and the funds are released over time as the loan (with interest) is repaid to the insurer… Continue Reading

About Reporting Those Late Deposits to 403(b) Plans…….

Posted in 403(b)
Though late deferrals to an ERISA 403(b) plan do need to be reported under the Compliance portion of the Form 5500 Schedule H or Schedule I, Form 5330 cannot be filed-in spite of the silence in the Form 5500 instructions. This is because the Tax Code's prohibited transaction rules, Section 4975, do not apply to 403(b) plans-even if it is an ERISA 403(b) plan. Form 5330 is only for plans to which 4975 applies… Continue Reading

Bringing Some Sanity to Calamity: 403(b)’s New Document Rules

Posted in 403(b)
When considering these new plan document rules and the new EPCRS together, there is a massive volume of sometimes difficult detail in the guidance. Much of it is thoughtful, some of it controversial and, I would venture to say, some of it innovative. For example, it ventures into the world of effectively requiring pre-approved plans while staying within its regulatory bounds (as we'll be discussing in future blogs). The most striking aspect of this effort, however, is what seems to be a newly institutionalized view that 403(b) plans are, in fact, much different than 401(a) plans, and often demands much different treatment… Continue Reading

The “Best Efforts” Standard of the 403(b) EPCRS

Posted in EPCRS
For 403(b) late adopters of plan documents,the VCP submission is conditioned upon adoption of a plan document which is intended to comply with 403(b); the plan, in operation, must have acted in accordance with a reasonable interpretation of 403(b) during the period of time for which relief is requested; and, for that period, the plan sponsor must have engaged in a compliance review, under which it used its best efforts to find operational problems and to correct them in accordance with the principles under EPCRS. For Audit CAP, this also appears to be the required correction… Continue Reading

The New 403(b) EPCRS Rules: Its, Um, Complicated…..

Posted in 403(b)
Be prepared to work hard when you need to take a 403(b) plan through the new EPCRS process under Rev Proc 2013-12-as many of you will need to do soon- especially if you have to use the VCP process, or are defending an audit under CAP.It is going to be complicated.This is not necessarily the fault of the drafters of the Rev Proc. They were stuck with a very difficult task: to try to make something which is fundamentally different from a 401(a) plan still fit uniformly into the 401(a) correction scheme… Continue Reading

Keeping Your 403(b) Plan In Control

Posted in 403(b)
If you have seen the November 14th edition of the IRS' Employee Plans New, you already know that "internal controls" is the latest catchphrase. And, as the IRS ramps up its audit activity with 403(b) plans, chances are that more IRS auditors will be asking 403(b) sponsors about internal controls for their plans… Continue Reading

The EPCRS and Audit Test of the 403(b) Regulations

Posted in 403(b), EPCRS
Now with EPCRS, we are told, being on the verge of release, and with 403(b) audits beginning to enter a new, what I would call "normalized" stage, the 2007 regs will truly be put to the test.Where this will have its impact is when you have to drill down and attempt to apply the regs in detail to any particular fact circumstance… Continue Reading

FAB 2012-2/ Q15′s Impact on 403(b)

Posted in 403(b), Fiduciary Issues
One of the more difficult questions that has arisen under the 404a-5 participant disclosure rules is related to those pesky "old" 403(b) contracts. In the multiple vendor ERISA world, where a number of vendors have been in and out of the plan over decades, the question becomes whether-and to what extent-the 404a-5 disclosures have to … Continue Reading

More Welcome 403(b) Relief from the DOL

Posted in 403(b)
The DOL, in its final 408(b)-2 regulation, issued relief for 403(b) plans, under which information related to  certain contracts would not be subject to the the new fee disclosure rules. Though this was very helpful, it did not specifically address the 404a-5 participant disclosure regulations for the same type of contracts. This raised a degree of … Continue Reading

Meaningful MEP Minutiae

Posted in 403(b), Multiple Employer Plans
 I have written often of the large impact of the small, the concept of  "minimum necessary change" to accomplish what needs to be done, and have noted a number of regulatory instances where this has been-and not-accomplished. This whole idea of small rules meaning much also has relevance in the Multiple Employer Plan world, in … Continue Reading

Using the IRS Interim 403(b) Document Audit Relief

Posted in 403(b)
I have expressed several times my sense that the 2007 403(b) regulations were unfortunate in a number of different ways. Though they sought to address some very real compliance issues, they did so in a heavy handed and often complicated way which virtually ignored the difficulties inherent in transitioning from a statutory and commercial system … Continue Reading

The 403(b) SPARK Standard Is Not a DOL Disclosure Solution

Posted in 403(b)
The 403(b) regulations replaced the "contract exchange" rules under Revenue Ruling 90-24 (which allowed the tax free transfer of 403(b) contracts between different vendors, including that of different plans, as long as certain, minimal conditions were met) with a new scheme of exchanges and transfers. After September 24, 2007, the former "90-24 transfers" between unrelated … Continue Reading

Important 408(b)(2) Relief for 403(b) Plans

Posted in 403(b), 408b2, Complex Prohibited Transactions, Fiduciary Issues
The DOL continues with its sensitivity to the challenges created for 403(b) plan sponsors in the transition to an employer accountable world. In today’s release of the final 408(b)(2) regs, the DOL provided tremendously needed relief for 403(b)plans. The language from the preamble speaks for itself: The Department was persuaded by commenters on the interim final rule … Continue Reading

The 403(b) 8955 FAQ: Sophistication, Nicely Done

Posted in 403(b)
Keeping it simple and sensible is never an easy task. As a matter of fact, it is extremely difficult to do, particularly when dealing with something as complex as 403(b) regulations. This is why the IRS’s recent release of its 8955 FAQ’s is so striking: in merely two FAQs,  IRS and Treasury provided answers that … Continue Reading

403(b) Plan Documents: “Planning to Amend,” by Linda Segal Blinn

Posted in 403(b)
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403(b), 8955-SSA and 408(b)2

Posted in 403(b), 408b2
Important Update. On June 21, IRS announced the extension of the 8955-SSA deadline to January 17, 2011, for which no Form 58 extension will need to be filed. The announcement is here   The challenges continue for 403(b) plans, as the IRS and DOL continue to implement their plan level rules in the 403(b) space. … Continue Reading

Healthcare’s 403(b) Aggregation Hangover

Posted in 403(b)
There are three key employer groups which utilize 403(b) plans: K-12; colleges and universities; and non-profit healthcare systems.  Of the three, its is healthcare that seems to be most impacted by the new aggregation rules introduced with the 2007 403(b) regulations. Not-for-profit hospital systems are typically corporations organized under the non-profit corporation rules of the … Continue Reading
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