MBA 403(b)
Action Steps
WHAT’S NEEDED BY JANUARY 1, 2009
Requirement: Written Plan.
Click here to see information on an extended deadline for completing the 403(b) written plan requirement.
The final regulations require that all 403(b) plans must maintain a written defined contribution plan document which satisfies the requirements of 403(b) plans in both form and operation. The plan must contain all the material terms and conditions for eligibility, benefits, applicable limitations, contracts available under the plan, and the time and form under which benefits would be made. The plan must also contain the optional features the employer allows under 403(b).
A written plan does not have to be a single document but can incorporate several documents. Such documents could include board minutes, administrative procedures, employee policy manuals, salary reduction agreements, service provider agreements, etc.
Action Step: Gather and review 403(b) documentation. Determine if your documents meet the requirements of the regulations. Make changes as necessary.
How MBA can help.
- The adoption of MBA’s plan document will allow you to meet all the regulations’ general requirements for 403(b) plans, e.g., applicable limitations, timing and form of benefits available, and the additional benefits of plan loans and hardship distributions.
- MBA will provide online templates to assist your ministry in meeting the remaining requirements (eligibility, types of contributions available, etc.) of 403(b). These templates will allow you to adopt MBA’s plan to meet the broad requirements of 403(b) plans.
WHAT’S NEEDED BEGINNING JANUARY 1, 2009
Requirement 1: Comply with the terms of your written plan.
The regulations require the employer to comply with your written plan including the limitations imposed by law.
Action Step: Establish policies and procedures to ensure compliance with the terms of the plan document. Your policies and procedures need to be designed to address compliance in eligibility, compensation definition, types and amounts of contributions allowed, legal contribution limits, etc. Such policies and procedures can be included in hiring practices, at performance reviews, monthly and annual processes, and in other processes.
How MBA can help.
- Legal contribution limitations are on MBA’s Web site.
- MBA will provide compliance for normal distribution processes on accounts with us. Distribution will be provided when members meet distribution eligibility in compliance with 403(b) rules and regulations and according to the Plan document. Please review, complete, print, and sign the appropriate template. You may use your own equivalent document if it contains all the necessary provisions and if it is acceptable to MBA.
- With proper agreements in place, MBA will provide compliance for plan loans, hardship distributions, plan-to-plan transfers, and contract exchanges. MBA will also provide a service agreement that you will need to review, print, and sign. This service agreement spells out responsibilities in the plan and becomes an integral part of your plan documentation.
- MBA’s Web site will be updated regularly as additional information is available and as guidance is received from our legal advisors.
- MBA’s staff is also available to give you guidance. Call toll-free at 1.800.622.7526.
Requirement 2: Information sharing. Note: Some information sharing requirements have been in effect since September 25, 2007. Your ministry would have been contacted by MBA for this requirement only if it was needed for a contract exchange.
If your plan allows for contributions to multiple retirement plan providers or allows for contract exchanges, additional action will be required.
Action Step: Be prepared to share information with service providers as needed.
How MBA can help.
- If MBA has been the sole service provider for your plan since January 1, 2005, your ministry’s compliance responsibilities for information sharing will be minimal.
- MBA will provide guidance and agreements as it pertains to members’ accounts.
- As the IRS releases additional information, MBA will share it on our Web site.
SPECIAL REQUIREMENT FOR A NON-QUALIFIED CHURCH-CONTROLLED ORGANIZATION
Requirement: If your ministry is a non-qualified church-controlled organization, you must meet non-discrimination requirements. These requirements are:
- Universal availability of deferrals. If you allow compensation deferrals for one employee, you must allow it for all (with certain permitted exceptions).
- If you have highly compensated employees (HCEs) as defined by law, you must test contributions to the 403(b) plan to be sure that non-elective contributions do not unduly favor the HCEs.
Action Step: Review your written 403(b) plan documents and your policies and procedures. Be sure that you allow universal availability of deferral contributions and that discretionary contributions do not favor HCEs.
How MBA can help.
- MBA will be providing an online template for NQCCOs to assist in creating a written plan which conforms to the non-discrimination requirements.
- Additional guidance will be on our Web site soon.
OTHER IMPORTANT INFORMATION
Contribution amounts must be transferred to providers within a period no longer than is reasonable for proper plan administration. Example: Elective deferrals to be transferred within 15 business days following the month in which these amounts would have been paid to the participant.
Employees’ rights to make a salary reduction contribution may not be conditioned on any other right or benefit. Example: You cannot require an employee to take a certain level of health insurance in order to be able to make salary reductions to the 403(b).
Helpful Links:
MBA Eligibility »
Benefits of MBA »
This information and the information contained in links are not considered legal or tax advice. AG Financial Solutions and MBA are available to give guidance and assistance to your ministry and your ministry’s legal and tax professionals.
