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Everything posted by wiltony

  1. Greetings, When our 403(b) plan was established back in 2009, the designers of the plan restricted all hardship withdrawal provisions to only two of the IRS safe harbor circumstances: 1) Imminent foreclosure or eviction, and 2) unreimbursed medical expenses. Since then, in 2013, we "froze" our 403(b) plan, allowing anyone participating at the time to continue, but any new participants would be directed to the state 401(k) plan, in which we participate. This also meant anyone who stopped contributions for any reason (including because of hardship withdrawals) couldn't continue again, and would be directed to the state plan if they wanted to subsequently resume optional retirement contributions. Through attrition, the old 403(b) plan would eventually terminate. Many individuals have inquired about hardship withdrawals outside of our limited set of allowed circumstances. We are considering changing the plan to allow the entire set of safe harbor provisions, but because of our freeze and the unusual current state of our plan, we are not sure if there would be any adverse consequences or rules we might be violating in doing so. Can you foresee any complications or issues with us changing our plan to open up hardship withdrawals to all of the safe harbor provisions? Do we need to do any reporting of such a change to external parties, besides the providers and our own grandfathered employees? I figure the IRS doesn't care. Just take it to our board? What else should we consider as we proceed? Thanks for any help and guidance you can provide!
  2. This was a big concern of ours. The thing was, we had a hard enough time as it was freezing the plan and choosing the state plan going forward. There were members on the committee that are very pleased with their 403(b) representative and didn't want to see that go away. It was a bit of a compromise to get what we did in exchange for allowing old participants to continue in the plan in its frozen status. Baby steps I guess. I agree with you, however, and desired to have the plan terminate, thus allowing a rollover. I've already had employees ask if they could rollover their money and I'm always dismayed to have to tell them that they can't.
  3. wiltony


    Innovest was our retirement plan consultant and I had the opportunity to work closely with Wendy and others on her team as we revised our plan. She is very smart and experienced in this industry and well-respected by me and others on our committee! There was a lot of discussion among our committee during our process about whether we should be providing our employees with lots of choice or not, as many felt that not having that choice and competition in the Plan environment would ultimately be detrimental. After all, capitalism, choice, and competition are as American as apple pie, right? But Wendy's (and my) stance on this matter is that competition should not be occurring within our plans, but should instead occur at the RFP level, where this is a level playing ground among providers and careful, thoughtful, educated analysis of the offerings. Competition is typically good, but shouldn't be occuring in front of a confused teacher on her lunch break from some slick salesmen with pizza and cookies. To reduce fees for participants; to streamline choices, education and communication; and to remove the sales culture in our plan; our District ultimately decided to freeze its 403(b) and 457 plans altogether and participate exclusively in the State's PERAPlus 401(k) and 457(b) plans. We are rolling out the change now. And I don't know if she was using it before our meetings, but if not, I have to take credit for the "analysis paralysis" phrase she used in the article! ;)
  4. St. Vrain Valley School District in Longmont, Colorado is the 9th largest school district in the state. The District recently "froze" its 403(b) and 457 plans in favor of participating exclusively in the State's PERAPlus 401(k) and 457(b) plans; thus providing a simple, low-cost option to all employees going forward. https://blogs.svvsd.org/retirementplan/plan-revision-information/
  5. Another follow-up. I've come across Treasury Regulation 1.403(b)-10(a) which expressly permits what I'm trying to do! From: http://www.irs.gov/pub/irs-tege/td9340.pdf#page=112
  6. Thanks Steve. I just wanted to close the loop on this. I checked out benefitslink.com and posted my question there, and got a good response. Here is the thread, if anyone is interested: http://benefitslink.com/boards/index.php?/topic/53642-universal-availability-pseudo-plan-termination/ In short, Universal Availability is not violated because all employees have access to the state's 401(k) plan instead. Now I just have to craft plan document language saying something like "everyone is excluded except those participating as of date" and I'm not sure how that's going to work!
  7. Thanks Joel, we'd like to do that, but it isn't politically feasible. This is the compromise we had to make to even get the ball rolling on the plan termination. Thanks for the reference, I'll check on benefitslink.com.
  8. We plan to kill our 403(b) plan by directing any and all new participants to the state's defined contribution plan (in which we participate) but grandfathering our existing plan by maintaining any existing participant contributions (letting it die a slow death through attrition.) Because our "grandfathered" 403(b) plan would allow existing participants to contribute, but not any new participants, does anyone think we might be violating Universal Availability?
  9. I just watched this; it was pointed out to me by the DC manager at Colorado PERA. My district is in the final stages of an RFP decision for a new plan and I sent this out to our committee members. Very timely for us!
  10. Okay, you got me wondering, so I actually checked: 55.28% equity 39.88% FI 2.56% cash 2.28% "other" (don't ask me what that is) 10.84% return
  11. Coming from someone with almost nothing invested, my 2012 return was an IRS Form 1040. :)
  12. Joel, yes. My question is more complex than what the pub addresses. I shouldn't have brought it up here. Like I said, it's "splitting hairs." It's hypothetical, and not likely to be an issue I'll have to deal with anyway.
  13. You answered my question and confirmed my suspicion that he was wrong, thank you so much for responding. I didn't really have a specific problem, I guess, other than that I've had, in the past, someone come in and say "I don't qualify for any hardship provisions or meet other withdrawal criteria, but I just want MY money; I'll pay any penalties, etc." and I turned them away. I didn't feel confident about doing so after reading that post I linked to above. I do now, however. I guess if I want to go into splitting hairs mode, I just want to clarify -- someone can take a hardship withdrawal WITH a penalty for unreimbursed medical expenses, but are EXEMPT from the penalty if those medical expenses exceed 7.5% of their AGI, right?
  14. Here's what threw me off, from http://www.wisestockbuyer.com/2012/06/can-i-get-money-out-of-my-401k-without-penalties/ "I’ll start by saying that you can withdraw money from your 401k at any time. It’s your money, after all; you have the right to pull your funds or even take out loans against them (more on that later). When you do, though, you not only have to pay taxes on your withdrawals; you also have to pay penalties." Is this guy just wrong? Or could the 401(k) and 403(b) rules differ in this situation?
  15. Okay, so I've been reading up on this for quite a while, and it's still not completely clear: With regard to a 403(b) plan, hardship withdrawals, and penalties: Can anyone, at anytime, for any reason, withdraw their money from their account as long as they pay the 10% penalty (on top of the taxes)? In some places, I've read that they can indeed do this, but it doesn't make sense, because: If so, what is the point of the hardship withdrawal provisions that are NOT exempt from the penalty, such as buying a home and education expenses? Why go through the "hardship withdrawal" headache if the outcome is exactly the same as if you performed an unsubstantiated "early withdrawal"? If so, do I as a plan administrator have to somehow sign off on this unsubstantiated early withdrawal? Or can they simply go to the provider and say "give me my money," pay the penalty, and be done with it? [*]As a related question, why do 457 plans even have a hardship withdrawal provision if there is no early withdrawal penalty? I guess if the answer to the first question is "no they cannot," then these rules make more sense. In that case, some hardship withdrawals allow for early distributions with a penalty, some without the penalty, and if no criteria are met, participants' money is completely locked up, right? Please correct my understanding, this isn't making sense!
  16. I have a working-retired employee in my Colorado school district that wishes to transfer the amounts from their 403(b) account into the State's 401(k) (PERA) plan. They are only age 55. Not separated from service, as they are working part time. I know an intra-plan transfer would be fine, but it seems to me this is technically a rollover, which isn't allowed unless a qualifying event happens (separation from service or 59.5). Is there something I may be missing, since participating in the state 401(k) is *also* a district-sponsored pre-tax contribution, though not technically within our 403(b) plan? Or perhaps because they're "working-retired?" I understand this kind of thing used to be allowed, but may no longer be since '09 rules? From: http://www.403bwise....nsferrules.html "Note: In the past employees were permitted to move 403(b) money into a 401(k) and vice versa. Some believe new regulations will not permit this. We will update this issue as it becomes more clear." Any advice/expertise as to whether this is allowed is certainly appreciated.
  17. Joel, I hear you! I will put significant consideration toward that option when going over all this. You're right; it doesn't make much sense to have our own separate plan, as long as the PERA return is comparable to our existing providers'. Even if it is, however, I think we both know there are lots of politics involved in doing something like that. Teachers will feel they're being forced into something and having their choice/freedom taken away. I know it's silly having them fight so hard against something that is really the best for them, but that's the American way, right? "It's my right to do it, even if it's bad for me." I gotta be sensitive here; there are a lot of people and history involved, and I don't want to ignore that, even if the choice is fairly black and white from our perspective. Judy, thanks for your note. I hadn't really thought about it that way, but of course, you're right. Thanks for the book recommendations as well.
  18. Thank you all, for your input. I'll contact the providers again and see what I can get from them. I wasn't sure if there was some standard disclosure/statement that they can provide me or send me on a periodic basis that would contain comprehensive ACTUAL fee information (if not, there should be!). Joel, we do have participants in the PERA 401(k)/403(b), but PERA aren't really advisors, out visiting employees, providing advice and guidance, and (of course) selling investment products. Therefore, while I'm not sure exactly what it is, I'm pretty sure the PERA discretionary investment participant rate is low. Also, since it doesn't really fall under my District's 403(b)/457 plan, it didn't really fall within my realm of responsibility and therefore hasn't been on my radar. Dan, I've checked out that site, but it's pretty hard to accumulate that data since I mostly do not have a comprehensive breakdown of what our employees are invested in. I'll keep you updated.
  19. Greetings, New bWise member here. I've become the plan administrator for my school district's 403(b) and 457 plans. This is a great site, and I've already spent a lot of time reading through the myriad resources outside the forums. I've been doing a lot of reading on fees and I want to get a clear picture of how we're doing at my District, because I suspect it's meandering out of control, as there has been little-to-no oversight for years, and the fact that NEA Valuebuilder is fairly popular here. From what I've read, NEA Valuebuilder is not very fair in fees, but if we ever go in a different direction, it's very important for me to justify with hard facts as to why. Luckily, we're not restricted like California. We can go out for bid. So I've been trying to look into how much, on average, our teachers are paying in fees in our plan. I've read in other topics that in California, teachers pay an average of 2.11% in 403(b) fees, and I'm trying to calculate what that number is in my school district in Colorado. What is the best way to do that? We have five different providers, so of course I'd like to calculate it by provider, but of course within each provider there are myriad products. Do they have a disclosure report I can request? I asked one rep, but he just gave me the fee information on their sales literature, which was not helpful. The literature doesn't give me any real picture of what was "actually" charged based on plan activity. What's my next step? Thanks all! Tony W
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