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The final Internal Revenue Service 403(b) regulations mean big changes in how your 403(b) plan must operate.
By January 1, 2009, the IRS will expect schools to be very involved in operating their 403(b) plans. The final 403(b) regulations, which came out in July 2007, impose greater responsibility on you for managing information and duties related to your school’s 403(b) plan, including:
These new tasks will mean more work for you and your staff—and, because the IRS will be auditing plans, more accountability as a plan sponsor.
While most of the IRS rules go into effect after next year, the IRS expects you to start sharing certain information about employees with your plan vendors as early as September 25, 2007. In the weeks and months ahead, remember:
- As you get ready to assume your expanded role, it is imperative to choose investment and service providers with the 403(b) expertise to satisfy the new requirements; and
- Now more than ever, you can rely on ING to offer the assistance, information, tools and services you need to comply with these new IRS rules.
Evaluating your current providers
As you evaluate your 403(b) plan, you may want to send a “Vendor Questionnaire” or “Request for Proposal” (RFP) to your current investment and service providers to help determine whether they can continue to meet your needs – and those of your 403(b) plan participants – under the new regulatory environment.
At ING, we welcome the chance to answer any questions you may have about how our 403(b) investment options and plan administration services can help ensure your plan remains in compliance with the regulations.
We have developed the following sample documents based on the thousands of RFPs and questionnaires we have received over the years. We are happy to provide these for your review/use in helping you determine which providers you want to work with going forward. Each has a slightly different focus:
- First, sponsors generally send a "Vendor Questionnaire" to their existing providers to determine basic capabilities.
- Next, sponsors will often choose a vendor or third party administrator to provide plan administration services - including common remitter service - by sending a Plan Administration Services RFP.
- Next, sponsors will send a formal Education 403(b) Request for Proposal to select vendors to provide products and services in compliance with the final 403(b) regulations. Please note: This document is customized for Education 403(b) plan sponsors and is based on questions created by SPARKS - a well-known industry trade association focusing on the defined contribution plan market.
These materials are not intended to be used to avoid tax penalties, and were prepared to support the promotion or marketing of the matter addressed in this document. The taxpayer should seek advice from an independent tax advisor.
Insurance products, annuities, and retirement plan funding options issued by (third party administrative services may also be provided by) ING Life Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Annuities issued by ReliaStar Life Insurance Company, 20 Washington Avenue South, Minneapolis, MN 55401. Securities offered through ING Financial Advisers, LLC (member SIPC), and other broker-dealers with which it has selling agreements. These companies are members of the ING family of companies. Insurance obligations are the responsibility of each individual company. Products and services may not be available in all states.
C08-0331-004R (04/2008)
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