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403(b)


IRS Compliance Regulations:
Historically the primary responsibility employers faced with non-ERISA 403(b) was to facilitate payroll deferrals and payments to any carrier or plan the employee elected. Thus today many 403(b) plans have grown in complexity and size due to the sheer number of vendors with which their employees participate. In addition, employers now face the challenge of managing the new IRS compliance regulations across multiple vendors.It has become too complex for many employers to handle without the proper expertise.

The Highlights of the new IRS Compliance Regulations are:
  • Written Plan Document by 1/01/09
    1. Approved, Orphaned and Grandfathered vendors
    2. Hardship distribution rules
    3. Loan aggregation
    4. Plan to plan transfer rules
    5. Contract exchanges and rollover acceptance rules
  • Universal Availability for education and enrollment
  • Aggregation; All 403(b) contracts, regardless of vendor, must be "aggregated" and treated as a single contract purchased for the employee by the Plan Sponsor
  • Timing of contributions from deferral to investment
The employer, as the Plan Sponsor, is now solely responsible for plan compliance. The new IRS 403(b) Regulations became effective January 1st, 2009. Plans must operate under the rules of the new regulations as of this date. The final written Plan Document, must be adopted by December 31st 2009 , with an effective date of 1/01/09. Operational defects however must be corrected retroactive to 1/01/09. Failure to follow the IRS regulations for compliance could result in fines and or tax liabilities and or loss of Plan approval.

Group and Individual Annuity Contracts
Many of the annuity contracts employees historically purchased and still own, are "individual" instead of "group" annuity plans. Access to employee annuity contract information, for compliance purposes, is often times easier inside a group plan as these are single entry data portals.

GreatGasb Group TPA SERVICES FOR 403(b) PLANS


Plan Design and Vendor Selection:
GGG can assist in the vendor "reduction" process through RFP or review of current vendors.

Adoption Agreement, Board Resolution & Plan Documents:
GGG will review and provide feedback on your current plan documents. In addition, we will assist in implementing any necessary changes required to keep your plan compliant. When available, we will work closely with your existing attorney to maintain your plan. A clear understanding of who the final Approved Vendors are for ongoing contributions, along with those that may be Grandfathered or Orphaned is then communicated in the Document or other approved materials.

Information Sharing Agreements (ISA):
GGG will obtain all the necessary ISAs from your active and orphaned vendors. These agreements are required from all vendors regardless of ongoing status with the Plan.

Aggregation:
Loans, hardship withdrawals, transfers, exchanges, rollovers and disbursement requests are all part "aggregation". GGG manages this entire process of behalf of the Plan Sponsor by monitoring and making determinations for approval or denial for all these requests directly from the participants.. This process will ensure that transactions are compliant with your plan document.

Records:
GGG manages all administrative functions and processes in preparation for audit. As such GGG holds copies of all vendor contracts, employee applications and salary reduction agreements to ensure that the Plan rules and policies are followed. Should an IRS audit occur, your Plan would be prepared for review.

Contribution Testing:
The GGG system can track and test contributions with each deferral remittance. In addition to annual regular deferrals, our system is able to calculate and track all "catch up" provisions within your plan.

Contribution Limit Monitoring & Annual Over Limit Calculations & Notification:
o maintain compliance of your plan, GGG will provide regular monthly monitoring of employees’ deferrals to ensure they remain within the stated regulation limits.

Common Remitter:
Plan Sponsors, along with their TPA, must be able to "follow the money" from payroll deduction to vendor payment. Vendor and investment deposits must be verified and made no later than 30 days from payroll deduction. The GGG system automatically determines the employee deferral amounts by vendor from direct payroll feeds. An aggregate "advice to pay" is then submitted to the Plan Sponsor's accounting office. GGG can remit to any number of Plan vendors along with corresponding allocation reports. These processes could be important should an IRS audit ever occur where the IRS needs verification of deductions and payment actuary. GGG works with you and your Plan Vendors to ensure that remittances are made in a timely manner, and in accordance with the Plan Document.

Universal Availability:
GGG will support the HR Department and current Investment Providers to ensure that all eligible employees have been educated on the employer’s 403(b) retirement plan. Our web site offers educational materials in support of the Plan and 403 (b) retirement savings. We also provide direct links to Plan vendors.

Banking (ACH):
GGG has the capability to ACH 403(b) deductions from an employer’s designated account, and then within 48 hours ACH the deductions to the corresponding vendors. The ACH transaction does not incur any additional bank charges, unlike wire transfers. The account we utilize to deposit and then send funds to vendors is fully insured by the FDIC. Electronic ACH pull and pay is our preferred method. We can however administrate via check and paper reports.

On-Line Web portal for Participants and Plan Sponsors:
Our website has the capabilities to receive account information from the 403(b) vendors, and provide an account summary of the employee’s 403(b) accounts. GGG can also offer direct links to any approved vendor , through our web site. The website can also house the employer’s plan documents, and necessary administrative forms for the employer and /or employee.

Consulting Services:
GGG can assist in advising you on your plan’s 403(b) vendor options through preparation and oversight of a global RFP. We can work with or independent of outside consultants. Through years of experience GGG specializes in plan design and fee negotiation. If there is a positive side to the new IRS regulations it may be that many employers are finding simplification and consolidation opportunities through reduction of the number of approved vendors. Many larger 403(b) Plans now look more like a 401(k) plans that offers an array of mutual fund options through a single vendor option. The ultimate goals are often are to lower investment program fees, enhance employee understanding of the 403(b), increase participation in 403(b) plan, ease of administration, and improved compliance procedures.

There are political reasons that "single vendor" designs may be more difficult to implement initially. Reduction of the number of vendors for compliance and administrative processes must be the primary goal. Variable annuities and mutual fund products often offer hundreds of fund choices within each vendor. Offering employee fund choice is easy. It is the reduction and simplification that can seem difficult. Unfortunately, offering employees an abundance of product choices can increase the difficulty of employers meeting their compliance responsibilities under the new 403(b) regulations .