New 403(b) Regulations: Schools Consider Options New Rules, New Risks and New Consequences
by Joe Zimmerman, Vermont School Board Insurance Trust Director
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- New regulations are effective January 1, 2009
- Require plan documentation to spell out the rules of the plan
- All vendors must comply with new regulations
- Employers must regularly notify all eligible employees of their ability to participate
- Education materials to assist employees in vendor selection
- Employers have the responsibility to approve and monitor their vendor options
- Employers must comply with all related changes to new 403(b) regulations
- No plan documentation, resulting in inconsistent/minimum administrative effort
- No control over or performance standards for vendors
- Over reliance on high-fee insurance based products
- Employees select vendors and schools process payroll deduction
- Schools send checks to a high number of vendors
- Schools not responsible for vendor selection.
The 403(b) Compliance Toolkit is the work of seven individuals who represent or service distinct constituencies in public education, and who learned quickly that teamwork and collaboration offered the best approach to understanding and implementing the new IRS rules governing 403(b) Plans. The Vermont Superintendents Association, VASBO, VSBIT and Vermont-NEA prepared a Toolkit as a resource for school districts and their employees. The Toolkit was e-mailed to superintendents and business mangers in early April, with additional resources contained on the VSBIT website . It is best to think of this Toolkit as a roadmap to compliance. Like most roadmaps, there are options in respect to the direction taken—but there is only one final destination. A 403(b) written plan document must be in place by January 1, 2009. Contact the VSBIT office if you have questions.
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