Fulton County Schools Response To Final 403b Regulations Issued By The U'S' Treasury Department Octo

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Fulton County SchoolsResponse To Final 403(b)
RegulationsIssued By The U.S. Treasury
DepartmentOctober 7, 2008

• Carl R. Mowery
• Managing Director
• SMART Business Advisory and Consulting, LLC
• cmowery_at_smartgrp.com
• [phone]

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Final 403(b) Regulations

• First major 403(b) regulations in approximately
  fifty years
• Proposed regulations published November 2004
• Final 403(b) regulations issued July 2007
• Regulations generally effective January 1, 2009
• Regulations apply to all 403(b) plans
• ERISA plans
• Non-ERISA plans
• Church plans
• Governmental plans

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Highlights of Regulations

• Written Plan
• Transfers and Exchanges
• Universal Availability
• Distribution and Loans
• Contribution Limits
• Timing of Contribution Remittance

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Written Plan Requirement

• Requirements
• A written plan is required for all 403(b) plans
• All terms and conditions must be in the plan
• Should be vendor neutral to accommodate multiple
  403(b) contracts
• Specific requirements of a written plan include
  eligibility, benefits, contracts available under
  plan, delegation of roles and responsibilities
• Districts Response
• The written plan document being presented tonight
  
• Meets all the requirements
• Has been reviewed by Districts Counsel, Brock
  Clay.

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Transfers and Exchanges

• Requirements
• Early compliance deadline
• Effective date September 25, 2007
• Transactions to another plan Transfers
• Transactions within plan Exchanges
• Plan may restrict products (separate life
  insurance products no longer permitted in 403(b)
  plans as of September 25, 2007)
• Districts Response
• District complied with the new requirements as of
  September 25, 2007, with notices being sent to
  the required parties.

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Universal Availability

• Requirements
• All eligible employees must have an effective
  opportunity to participate
• Eligible employees are individuals who perform
  services as an employee
• Ineligible employees include independent
  contractors, leased employees, and board members
• Districts Response
• New plan document conforms with requirements
• A multi-media campaign is being designed by the
  District to conform with the annual notice
  requirement

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Distributions and Loans

• Requirements
• Subject to 401(k) hardship distribution rules
• Plans can require providers to administer
  distributions and loans
• Plan cannot assign duties to participants
• Districts Response
• Plan document conforms with the new requirements
• District is discussing with vendors to provide
  the necessary administrative services to oversee
  the loans, at no cost to the District or its
  employees

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Contribution Limits

• Requirements
• Clarification and revisions
• Contributions in excess of Code Section 415 (c)
  limits
• Post separation
• Catch-up
• Districts Response
• The Districts payroll system has been aligned
  with the regulations to ensure compliance with
  the regulations

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Timely Contribution Remittance

• Requirements
• Amounts must be transferred within reasonable
  time
• Time reasonable for proper plan administration
• Fifteen business days following month contributed
  
• Safe harbor example not rule
• Remittance directly or third party
• Districts Response
• The District remits all contributions within 10
  days after the month in which the contributions
  were made (or within 45 days after the amount is
  deducted from pay check)

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Required Minimum Distributions

• Requirement
• Retirees and other terminated employees must
  begin withdrawing their contributions by age 70 ½
  in accordance with certain rules
• If they have multiple accounts, the distributions
  may be apportioned to each account or the
  participant may satisfy the requirement from one
  account
• Districts Response
• Plan document conforms with the new requirements
• District is discussing with vendors to provide
  the necessary administrative services to oversee
  the distributions, at no cost to the District or
  its employees