FAQ
Other 403(b) Compliance Issues
What is the penalty for failure to submit deferrals on a timely basis? What is the penalty for failure to meet other 403(b) regulations?
Penalty taxes can apply for failure to comply with many of the 403(b) provisions. Additionally, certain failures may cause one or all employees’ 403(b) account balance(s) to become taxable immediately.
Will you have a packet of compliance information for new churches (church plants) in the future?
We will always provide 403(b) compliance information to churches.
Does the employer have any responsibility with an account if an employee has a severance from employment?
The employer should inform 403(b) plan service providers of the severance from employment. This allows a lay employee to take a distribution or roll the funds to another plan. There may be some additional responsibilities for verifying certain items for hardship distributions and loan approval unless MBA is the exclusive service provider.
In the MBA plan, if a minister or former lay employee stays with employment with another AG employer, the account transfers to the new AG employer. In that case, the former employer’s responsibilities end.
What was the fifth action step mentioned during the Webinar that was not listed on the top action step slide?
That step was for leadership of ministries using multiple service providers to evaluate and decide how the ministry will operate moving forward. Using one service provider will allow the ministry to simplify administration of the plan. One of the several benefits of using MBA as an exclusive service provider allows MBA to administer the hardship distributions and plan loans.
Please clarify which retirement plans are covered by the new regulations. Are IRA’s affected?
Only 403(b) retirement plans (like MBA’s retirement plan) are covered by the new regulations. IRA's are not affected by the new regulations.
Why were these regulations created?
When the IRS was auditing some 403(b) plans, they found that employers and accounts were out of compliance with the laws governing 403(b)'s. The new regulations were issued to improve compliance, update changes in laws, and to diminish differences between 403(b)'s and 401(k)'s.
How do the 403(b) regulations affect the individual minister?
The compliance issues are primarily for the employer. If a minister is an evangelist or chaplain, they will have to comply with the regulations, including adherence to contribution limitations, as if they are the employer. MBA can give guidance to these ministers.