403(b) Plan Compliance
Deadline Is Less Than Six Months Away
School Advisor, 2008 Issue No. 2

Many school districts are working hard to strategize, develop, and organize their approaches to meeting the administrative and compliance requirements of the final 403(b) regulations. Whether you opt to select and retain a third party administrator (TPA) or establish your own internal administrative practices, we urge you to act now and not wait until classes resume in the fall.   

Some school districts have chosen a TPA or are in the final stages of analyzing proposals. Many school districts are relying on a “consortium” or ISD to review candidates and choose a TPA so that the district can “tag along.”  Other districts are just waiting. 

If your district intends to use a TPA, consider budgeting $10 per employee per year plus a few thousand dollars for startup expenses—a TPA may be less expensive—but a few may be more expensive. You should plan on reviewing a services agreement or contract with the TPA, a plan document, a provider agreement, employee communication materials, and a number of forms and possible collateral agreements.  Determine who will need to review these documents, including legal counsel and the school board.    

Consider reading one or two TPA request for proposal responses to get a feel for how the process will work, what your district involvement will be, and the general work flow. Review an implementation timeline. Develop questions that you are likely to ask any TPA about implementation, processes, and procedures.  Each TPA has a different personality and a different operating style. Many committee members reviewing TPA candidates have very different opinions about the “best” TPA. 

Those districts planning self-administration or acting as the 403(b) quarterback should already be heading down the road with an analysis of plan design features, administrative procedures, provider responsibilities, and requests of providers for data. Plan documentation and provider agreements should be on the checklist and available for provider review and acceptance in the near future. Be sure to budget for the appropriate staffing that will be necessary to take on these additional responsibilities. 

Regardless of which approach you take to ensure 403(b) compliance—it will be a busy fall. 

For assistance with developing your 403(b) compliance strategy, please contact Bruce Delbecq at 248.375.7276.