FAQ
Service Providers
Only one of our employees is using a service provider (vendor) other than MBA. If we start using MBA exclusively, do we have any responsibility for the account at the other service provider?
Your written plan must list the other service provider as one that was formerly used. Most of your responsibility for the account will end if you do the following:
1. Write a letter to the other service provider which includes the following:
- You will no longer be using them as an approved vendor for 403(b) purposes.
- That they should cease to offer hardship distributions and loans to the participant (employee).
- Tell them to inform you if there have been any hardship distributions in the previous six months.
- Tell them to inform you of any plan loans that have had a balance in the last twelve months and the highest balance of the loan(s) in that time period.
2. Inform MBA of any hardship distribution or plan loan from responses from items c and d above. We will request additional information from you if necessary.
If an organization continues to use multiple vendors, does there need to be a written plan with each vendor?
There needs to be one or more documents that identifies compensation for contribution purposes, eligibility, service requirements, contributions allowed, current and former vendors offered, optional features offered, and for which administrative and compliance functions the employer and the vendor(s) are responsible. MBA’s plan templates can assist in meeting most of these requirements.
Additionally, each vendor will have their own documents that will be required to be completed for 403(b) purposes.
Our church only uses MBA for our retirement service provider. One of our employees has another 403(b) account from a previous employer. Does this mean we have multiple service providers for the plan?
No. Your status of offering a single service provider plan or multiple service provider plan is determined only by the number of service providers you offer now.
If you are currently using only MBA as a service provider, but have used other service providers in the past (after 12/31/04), you must still list them in your written plan designating them as a former service provider. However, you are still offering a single service provider plan if you have stopped using all other providers except MBA.
Your employees may be able to transfer or rollover balances from other 403(b)'s, 401(k)'s, governmental 457's, profit sharing plans, and traditional IRA's to MBA. Have them contact us at 800.622.7526.
How do we freeze service from other vendors? If we freeze service from other vendors, what responsibilities will we have with the accounts at those vendors?
Your responsibilities become very limited if you have an exclusive service provider agreement with MBA and you have written to the other vendors telling them that you will not use them any longer and that they should stop offering loans and hardship distributions to your employees.
You should also request a list of any hardship distributions that have been made in the last six months and a list of outstanding loans. If these services have been made, share them with MBA. We may ask for additional information in order to administer loans and hardship distributions for employees that have used these features.
The other vendor may require you to sign an information sharing agreement with them. The only other responsibility you may have is to inform all service providers when an employee has had a severance from employment with you.
If a ministry is currently using more than one service provider, are you allowed to require employees to transfer funds to MBA?
Technically you probably could require the employee to transfer funds from other service provider to MBA. Practically that may be an extremely bad idea. Many service providers may charge a number of fees for the transfer. Such fees could be a back-end load, a redemption fee, or a transfer fee. An employee may lose a large amount of the value of their account. Additionally, the other service provider may consider the account they hold as an agreement between them and your employee and not the employer. If this is the case, they may not allow a forced transfer to MBA.
A better option would be to cease contributions to the other service providers and write them a letter stating that they should no longer offer plan loans or hardship distributions from the accounts they hold related to your ministry. Tell the employees with the other providers that they can consolidate their accounts into one MBA 403(b) account. MBA can help you with this process.