Streamlined Compliance Anticipated for Colleges and Universities with a Single 403(b) Provider
Employee Benefits Alert — Higher Education Services, Fall 2007

Many higher education institutions utilize a single 403(b) provider. Both employee and employer contributions may be made to the 403(b) plan; a plan document is currently in place and Form 5500 is filed annually. If your organization sponsors a 403(b) plan with these characteristics, the new rules will provide meaningful, but perhaps not drastic, changes to your plan.

We believe that the following approach would assist with bringing the plan into compliance:

1. Planning. Develop an understanding of the new rules and create a compliance game plan. This will include identifying an implementation team and timeline.

2. Provider Coordination. Coordinating and working together with your provider will be an important and efficient approach. If you have changed providers and participants still have contracts with a former provider, a coordination approach with respect to those old contracts will be important.

3. Plan Design and Administration. Some organizations will offer fewer options and less flexibility. Among the items to be considered will be ensuring that universal availability rules are met and that the organization is providing oversight with respect to the administration of the plan, considering that the plan sponsor now will have ultimate responsibility for plan compliance.

4. Written Plan Document. The existing plan document will have to be amended to comply with the final 403(b) regulations.

5. Provider Agreements. Since many of the plan administrative functions will be delegated to providers and the employer sponsor has ultimate responsibility for compliance, most organizations will conclude that it is important to have an agreement in place that will ensure cooperation, set expectations, and provide approaches to remedy issues that may come up.