Linda Segal Blinn, Vice President of Technical Services at ING, discussed requirements of the new 403(b) regulations, including the requirement that all plans have a written plan document and what information the document must include. She also expounded on what new restrictions on contract exchanges and new requirements for monitoring plan transactions and limitations means for plan sponsors.
Segal Blinn suggested sponsors make use of all the information on the new regulations out there from plan providers, the IRS, and others in the 403(b) marketplace, and know what they have to do before moving into the implementation phase. Once sponsors understand what is required, they should assess what they already have in place and think about the different elements they want in their plan design, including the providers they want to use; rules for distributions, loans, and exchanges; who will be responsible for plan oversight; and what additional features they might want to offer participants, such as Roth 403(b) contributions.
Sponsors should also review collective bargaining agreements to know what is required by them and check state laws that could spell out what rules sponsors have to follow or not, Segal Blinn advised. She said sponsors can pull together provider contract agreements, union contracts, and existing participant communications to see if those items will fit the requirements for a written plan document.
However, Segal Blinn noted that most sponsors are going with a new formal written plan document to be sure all pieces are in place, and this is what the IRS recommends if more than one vendor is offered by the plan.
The decisions on providers whose products will be offered by the plan and the provider who will be responsible for monitoring, if the sponsor decides not to do the monitoring, must be made and service agreements must be in place before the plan document is completed. The IRS requires that the plan document identify contracts available in the 403(b) program as well as the party or parties responsible for oversight.
Finally, sponsors must decide on a communication plan, according to Segal Blinn. Participants have been used to having control over making transactions within 403(b) plans and must know that the rules have changed. Sponsors must decide how best to communicate plan changes, provisions, and participant eligibility, whether it will be via email, a Web site, written communications, or some combination of the methods.
Segal Blinn also advised sponsors to keep documentation of the plan communications including who was notified and how.