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403(b) Retirement Plans From Here to There

For Tax-Exempt Non-Profit Organizations


403(b) Plans

Our plan is a mess. We are not sure our document complies with the current law. We may not have filed all the 5500’s we were supposed to have filed. We have too many vendor/providers and some won’t even cooperate with us very well because they say their contract is only For Tax-Exempt Non-Profit Organizations with our participants! And now someone has told us we have to make fee disclosures and that we are legally responsible for the investments which our participants can choose!

The paragraph above contains many of the statements commonly made by tax exempt sponsors as they become aware of their legal and fiduciary responsibilities for their 403(b) plans in the compliance world after 12-31-08.

The good news is that an experienced consultant/TPA has solved all of these problems for many 403(b) plans in the last few years. The urgency is that the DOL knows there is a lot of non-compliance and that the audit activity is higher than it has ever been for 403(b).

Advisors with ERISA knowledge and experience have never been more needed! Board members for 403(b) plans are your clients and contacts. 403(b) Boards are more active (in general) and 403(b) Boards are more active (in general) and made up of the decision makers in the community.

Here are the questions to ask and the items to look for:

  1.  Does the Plan have a Committee? Without proper delegation to a Plan Committee, the Board remains personally liable for actions or inactions such as late deposits.
  2. Does the Plan have an Investment Policy Statement? Annual Investment and Plan Reviews?
  3. Has the plan sponsor received 408(b)(2) notices from vendors? Have 404(a)-5 notices been sent to participants?
  4. Does the plan have an advisor or broker who is independent and not tied to a set of specific investments?
  5. Are the funds more expensive than a competitive set of funds for a plan of this size?
  6. Are the payroll contributions deposited within days of the payroll date?
  7. Are all employees eligible for 403(b) deferrals?
  8. What does the Employee Handbook say about the plan?
  9. Has a current SPD been distributed?

Help is on the way! And you, the advisor, can be part of the solution!