Conundrums can be caused by the “mismatching” of the 403(b) rules to pension professional, as well as the lawyer , registered rep and CPA, under their ethical rules.
Continue Reading The Unusual Matter of 403(b) Ethics
Auditing Distributed 403(b) (and 401(a)) Contracts
How do you audit a 403(b) in-kind distribution? There is no financial transaction, no cash changes hands, there is no change in investments. It really is only a nominal change in the records of the insurer. Yet, somehow, GAAP requires that the “transaction” be verified. There is no answer, yet, to this question, which means the industries (that is, auditors, insurers, and lawyers) will be pressed for finding a standardized approach for bringing audit certainty to this process. It even becomes a bigger issue than 403(b)s: QLACs and other distributed annuity contracts are all able to be distributed as “in-kind” distributions from 401(a) plans as well, and there is no acceptable “recordkeeping” method to audit.
Continue Reading Auditing Distributed 403(b) (and 401(a)) Contracts
403(b) and the Fiduciary Rule
As in all things 403(b), it seems, retirement rules of generally applicability take unusual twists when applied to 403(b)plans. The DOL’s fiduciary rule is not saved from that same problem. A close look reveals interesting twists in the manner in which the rule affects (or doesn’t at all!) 403(b) plans, which simply do not apply to other participant directed defined contribution plans.
Continue Reading 403(b) and the Fiduciary Rule
Tax Code Will Permit Merger of 403(b) and 401(a) Church Plans
Much has happened since we’ve last posted a blog-upon some of which we could hopefully lend some helpful comments. The press of year end business (a problem which we are delighted to have!) and spending precious family time around the holidays made it difficult to get to those things thoughtfully. We look forward to working
A 403(b) Collective Trust? A Note of Caution…..
Two issues need to be addressed with a 403(b) plan’s purchase of the collective trust interests of the sort that are typically sold to 401(k) plans: Code Section 403(b) only permits investments in mutual funds and annuity contracts. The CIT interests purchased by 401(a) plans, however, are typically “unitized” non-mutual fund interests. Even if one could overcome the legal and logistical challenges to making them work for the IRS 403(b) rules, there is a serious securities law problem.
Continue Reading A 403(b) Collective Trust? A Note of Caution…..
Fiduciary Liability for 403(b) Non-ERISA Plans?
In what appears to be one of the first reported appeals court cases involving school district liability under state law related to a wrongfully administered 403(b) plan a Wisconsin court found was that an action alleging a failure to exercise ordinary care in the administration of a 403(b) plan, if proven, could be a fiduciary breach under state law. This breach then may entitle the participants relief in state court.
Continue Reading Fiduciary Liability for 403(b) Non-ERISA Plans?
State Auto-IRAs and Federal Law: “We’ve already stepped on that rake…..”
Chuck Thulin, a fine ERISA attorney from Seattle, WA, chaired the DOL practitioner panel at the latest (and very successful) annual meeting of the 5 regional TE/GE Councils, in Baltimore. When I commented that we’d “been there, done that” when discussing some obscure rule, he told me of reading of the Russian language version of
Dealing with “Small Amount” 403(b) Annuities of Former Participants, and Other Matters
It is going on 8 years now since since the IRS fundamentally changed the 403(b) world with the issuance of regs which were designed to make 403(b) plans more like 401(k) plans, and to formally impose more employer accountability on the operations of those plans. Though those regs brought very valuable change in many ways,
Trouble Ahead for the Non-ERISA 403(b) Plan*
* 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,
Rome was not built in a day… build internal controls one step at a time
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 controls are vital to avoiding possible compliance gaps and hiccups and maintain a successful retirement plan.”
The IRS recognizes that gaps and hiccups will arise when comparing FORM, the plan document & design, to the plan’s operations, administrative processes and procedural activities. The IRS provides guidance for plan sponsors to self-correct with the understanding that it isn’t as simple as just finding the gap or hiccup. The IRS expects the plan sponsor to take three steps when gaps or hiccups arise…
Continue Reading Rome was not built in a day… build internal controls one step at a time