When we assess how to implement the tremendous changes that we see on the horizon, whether it be  implementing unique lifetime income vehicles,  PEPs, collective trusts, or any other of the sort of the innovative programs being develop which are designed to enhance retirement security. Putting them all into play requires attention to this obscure detail.
Continue Reading The “Entity” Difference Between 403(b) and 401(a) Plans

Congress is taking a well crafted, though pretty unusual, approach to the manner in which it has chosen to allow 403(b) plans to participate in PEPs. It is doing so in a way which seems to be a recognition of the impact of the details that associate to these sorts of dramatic changes. What is noteworthy is that 403(b) PEPs are going to be enabled through changes to 403(b), and not by simply including them in the definitional sections of 413(e), and through changes to ERISA’s PEP language under Sections 3(43) and 3(44). This is critically important because had Congress chosen to simply amend 413(e), it would have opened a Pandora’s box of details which would have demanded clumsy (and perhaps extensive) regulatory fixes. 
Continue Reading SECURE 2.0’s 403(b) PEP Rules Will Be, Well, Different…..

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 403(b) market. Guarantee lifetime payouts from 403(b) annuity contracts are still alive and well, particularly in the higher eduction market which is still dominated by TIAA and its insurance products.  However, with the  the now-decade-long-shift in the 403(b) market to the mutual fund based group custodial arrangements designed to mimic 401(k), where do those new lifetime income programs fit?
Continue Reading 403(b) and Lifetime Income

You may’ve noticed that the SECURE Act introduced yet another new twist to the 403(b) world: the Qualified Plan Distribution Annuity Contract (“QPDAC”-you may want to look at my prior blog related to these lifetime income acronyms). Its not that Congress was singly out 403(b) plans, as 401(a) and 457(b) plansnow also have the ability to distribute QPDAC. But, as in all other things 403(b)s, there are a number of unique twists to the rules which exist solely in the 403(b) world.
Continue Reading The 403(b) “Qualified Plan Distribution Annuity Contract” Under SECURE Section 109

Mike Webb,  (formerly of Cammack Consulting, now being part of Captrust) who has been one of the true 403(b) thought leaders in the country for a number of years, runs a podcast series called called “Revamping Retirment.”  Mike wanted to have a conversation with me about annuities. We do talk about 403(b)’s in the video, of course, but also of many other annuities issues, like  the reluctance of sponsors to take up lifetime income, the value of annuities as well as their problems as they are currently being sold in the market. This resulted  in a refreshing  22 minutes of great conversation.
Continue Reading A Frank-and Fun-Conversation on Annuities with Mike Webb

The minute differences between 403(b) plans and 401(k) plans are often inconvenient, at best, and sometimes they produce serious conundrums in plan administration which can be difficult to resolve.
Prominent among these is the issue of “small amount” cash-outs from 403(b) plans. The ability to cash out small amounts for terminated participants is especially important for a number of “small plan” filers, who are on the cusp of having to comply with the large plan audit rules because of long lost terminated employees with individual contracts who are still counted int the plan’s census-even after eliminating those you can under Rev. Proc. 2007-71.
Continue Reading A Technical Analysis of How “Small Amount” Cash-Outs Under 403(b) Plans Work

There is no “vesting on partial termination” for 403(b) plans, and no need to track the “20%” rule for vesting on partial terminations for a 403(b) plan. That rule simply does not apply. This his true for both ERISA and non-ERISA 403(b) plans.
As a practice note, if you have mistakenly applied that “partial termination” vesting rule to a 403(b) plan, you may have an operational error.
Continue Reading Are There “Partial Terminations” of 403(b) Plans ?

The structure and the language used by the drafters of the CARE Act in their crafting of the new participant loan repayment suspension rules seem to be both rare and stunningly broad: it appears to mandate, as a matter of federal law, that each loan repayment due through December 31, 2020  by COVID qualifying participants are suspended for one year.

This is actually a big deal. Section 2202(b)(2) of the CARES act, which mandates the suspension, did fool with the amortization schedules, or the timing and taxation of defaults under  Section 72(p) of the Tax Code, which is the section which governs the tax aspects of loans. In fact, it did not amend Section 72(p) at all.  Nor did it amend any part of ERISA Section 408(b)(1), which hold the ERISA rules governing loans.
Continue Reading The CARES Act Participant Loan Payment Suspension Rules Take an Unusual Approach in Making the Change; 403(b) Policy Loans Affected Differently