The IRS has issued new regulations which had a major impact on all 403(b) plans. As a church sponsored 403(b) plan these new regulations had to be in place by January 1, 2010.
What are the changes ?
The former IRS rules for 403(b) plans required little sponsor (the Diocese) involvement and instead relied heavily on the 403(b) providers’ (e.g., ING, Mutual of America, Union Central) participation in regard to investment options, education, etc. The agreements were made between the employee and the 403(b) provider thus, limiting the plan sponsor’s ability to monitor the level of service.
The new IRS rules bring 403(b) plans closer to the standards set for 401(k) plans. The changes demand that a summary plan document be issued to employees. The plan document will include the terms and conditions of the plan such as contribution limits, participation eligibility and procedures for loans and hardship withdrawals.
In addition, the plan sponsor (the Diocese) is required to assume a greater fiduciary role in ensuring that the investment options offered and rates of return are consistent, competitive, and in compliance with industry standards.
How was the decision made to change vendors?
In mid-2008 a taskforce started to examine the existing Diocesan sponsored 403(b) plans for lay employees and clergy and what changes were needed to comply with the new IRS regulations. The taskforce compared the existing vendor’s plans to those of other vendors. This assessment examined the following criteria:
- Plan installation fees for employers
- Annual administration fees for employers
- Investment selections for employees
- Average expenses and fees for employees
- Education and communication tools
Unanimous consensus was reached on a single vendor with a sound reputation and which offered open architecture, best pricing, ease of payroll submission, ability to handle multiple participant locations, and a demonstrated willingness to work with the Diocese and its affiliated organizations. That company was OppenheimerFunds.
Is this related or will this affect my diocesan pension?
No, this does not affect your pension. The pension and the 403 (b) are two different plans.
Do I have to participate in the OppenheimerFunds plan?
If you wish to take advantage of the tax benefits offered by contributing to a 403(b), your contributions will only go to OppenheimerFunds plan as of the first pay period in March 2010. If you do not wish to participate, you may opt out by notifying your employer that you no longer wish to have your pre-tax income reduced.
What is going to happen to my ING or my Mutual of America account? Are you going to move the money automatically?
No, neither the employer nor the plan sponsor (the Diocese) have any control over your funds. Your accounts with any previous 403(b) provider can remain with that vendor or be rolled over, if you so choose. You can contact Gerard or Pat Trapp for guidance on how to accomplish a rollover (888-588-6601).
What about rolling over?
You can roll over all or part of your existing 403(b) accounts. As with most transactions, there may be related fees. You can check with American Portfolios (888-588-6601) or the vendor.
Can I decide, on my own, to continue contributing to (ING, Mutual of America, etc)?
403(b) plans are retirement savings plans that are only provided through the plan of the non-profit employer. Therefore, you cannot continue to make pre-taxed salary contributions to your current 403(b) programs after March 1.
How do I enroll ?
You can enroll online it’s that easy! Here are Step-by-Step Instructions
• log on to www.bcgbenefits.com/dob
• Click on the “Employees” section and “Login”
• Click on “New to system? Enroll now!”
• Login will be your social security number (no hyphens)
• Password = welcome (all lower case)
Then complete the following five enrollment steps:
Step 1 of 5: Personal Information
Simply follow the instructions and add your personal information. Items marked with asterisk (*) must be completed before you proceed to the next step.
Step 2 of 5: Designate Your Beneficiaries
Follow the instructions to complete this section. Click the “Save and Continue” button to go to the next step.
Step 3 of 5: Contribution Limits
Follow the instructions to complete this section. Click the “Save and Continue” button to go to the next step.
Step 4 of 5: Select Investments
Select “All Sources,” which will enable all sources to be invested in the same manner. Hit the “Save and Continue” button to go to the next step.
Step 5 of 5: Select Investments - continued
Fill out the necessary information and then hit the “Save and Continue” button. You may “Logout.”
If I am currently contributing and I forget or can’t register with Oppenheimer, what will happen?
In compliance with the IRS regulations, your current contribution amount will be defaulted to the OppenheimerFunds Moderate Investor Fund, until such time as you chose a different allocation.
Can I talk with a representative personally?Yes ! The professionals at American Portfolios are there to explain various investment options available through the 403(b) plan. You may call them directly at 888-588-6601. Ask for Gerard or Pat Trapp.
This all seems to be rushed. Why are we getting this last minute?
As mentioned in an earlier answer, the previous IRS rules for 403(b) agreements were made between the employee and the 403(b) providers. The providers were under no obligation to provide to the Diocese the names of participating employers or employees.
After January 1, 2010, when the new plan went into effect, participation agreements were signed and the previous vendors were required by law to share the names of participating vendors and employees. Immediately after, the packets were prepared and meetings scheduled. The inclement weather caused a cancellation of the originally scheduled meetings.