Data & Research December 18, 2008

403(b) Plans Have Some Work to Do

403(b) plan sponsors have just gotten some additional breathing room from regulators – and, according to a recent survey, they’ll need it.
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Last week, the Internal Revenue Service (IRS) gave 403(b) plan sponsors an extra year to get their written plan documents in order under new regulations, subject to certain conditions (see IRS Offers Relief for 403(b) Written Plan Requirement).

According to the 2008 403(b) Plan Survey, 41% of 385 respondents say they need to make changes to their 403(b) plan to comply with the new regulations, and just about one-in-ten said they were unsure of their plan’s ERISA status. “In light of the final 403(b) regulations, plan design is a key concern for 403(b) plan sponsors,” says Aaron Friedman, national practice leader—non-profit, The Principal.

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The survey, sponsored by the Principal Financial Group, is the first 403(b) benchmarking survey from the Profit Sharing/401k Council of America (PSCA).

According to a press release about the survey – which will be available for purchase early next month, 53.1% of 403(b) plans offer a match of one dollar or more for every dollar employees contribute, compared with just 36.2% of for-profit companies offer the same amount according to PSCA’s 51st Annual Survey of Profit Sharing and 401(k) plans (see PSCA Survey Shows Auto Enroll/Higher Participation Link).

PSCA’s 2008 403(b) Plan Survey will be available for purchase in early January for $145 for PSCA members and $375 for non-members. Surveys may be pre-ordered now at www.psca.org.

Compliance December 18, 2008

EBSA FY 2008 Enforcement Reaps $1.2B, 101 Indictments

The U.S. Department of Labor Employee Benefits Security Administration (EBSA) recognized $1.2 billion in monetary results and helped spark 101 criminal indictments in fiscal year 2008, the agency announced.
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According to an EBSA news release, the agency also closed 3,570 civil investigations in FY 2008 with violations being found and corrective action being taken in more than 75% of the cases. The agency recovered $139.2 million for workers and their families through informal resolution of individual complaints.

During the last eight years, EBSA tallies show, the agency achieved cumulative monetary results of $11.9 billion for pension and other employee benefits plans. During that same time, 907 individuals were indicted for crimes related to employee benefit plans.

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“EBSA has aggressively pursued its core mission of enforcement, producing record recoveries for employee benefits plans and millions of American workers, retirees and their families,” declared Bradford P. Campbell, assistant secretary of labor for the EBSA, in the news release. “The success of the program is the result of a tough enforcement program balanced with compliance assistance activities that help plan sponsors comply with the law, giving the agency the ability to focus its resources on offenders.”

EBSA also said its Voluntary Fiduciary Correction Program (VFCP) recovered more than $449 million for employee benefit plans and received 6,393 applications from 2001 to 2008. In fiscal year 2008, the compliance assistance program received 1,658 applications from employers, plan officials, service providers and other fiduciaries to self-correct violations of the Employee Retirement Income Security Act (ERISA), and $8.7 million was voluntarily restored to employee benefit plans.

More information is available at http://www.dol.gov/ebsa/newsroom/fsFY08results.html.

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