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

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

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

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

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So what are we finding as we get down to this nitty gritty of things? Most striking is the unique ways in which ERISA’s fiduciary rules will need to be used in their application to ERISA 403(b) plans. It is not that the rules were never there in the past, it is just that the new rules have forced the industry and employers to more closely define their relationships and the duties for which vendors and employers will each be responsible. This process of defining roles have caused us all to look more closely at how the rules apply, in ways we have never done in the past….Let me give you an example…What are the ERISA implications of a fund substitution under individual annuities for the 403(b) plan fiduciary?
Continue Reading 403(b) Fiduciary Challenges Demand Applying ERISA in Unique Way

Our blog of May 26 on "Distributed Custodial Accounts" generated a number of comments, which require a bit of a "follow-on."  Ellie Lowder, one of the grand dames  of the 403(b) world, agreed with my assessment.  She mentioned  that she had discussions with the IRS on this point. Staff  just couldn’t see how distributions of