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Dan Otter

403(b) Plan For All State Workers?

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Guest Joel

My new year's wish has come true and it is still only January. IMAGINE, A 403(b) WITH INSITUTIONAL PRICING! WOW!

 

This is a watershed time in the evolution of cleaning up the 403(b) mess. If HR 3718 becomes law then the various states who already have a fine track record in providing their employees no-load investment opportunities under 457(b) just need to offer their employees a companion 403(b). They will not be hoodwinked by the 403(b) sharks because they know the value of offering their employees a no-load investment platform. We must do our part in assuring that HR 3718 becomes law and then make sure the various state governments operate the 403(b) along the same lines as their companion 457(b) Plan. AND EACH STATE GOVERNMENT SHOULD ALLOW ITS LOCAL EMPLOYERS AND SCHOOL DISTRICTS TO PARTICPATE.

 

THIS IS JUST GREAT NEWS!! HOPEFULLY THIS WILL PUT A DAGGER INTO THE HEARTS OF ALL THE 403(b) PROVIDERS WHO HAVE HAD A FEEDING FRENZY AT THE LOCAL SCHOOL DISTRICT LEVELS AS WELL AS AT ALL THE "SMALL"/"LARGE" 501© EMPLOYER'S over the last 40 years.

 

Peace and Hope,

Joel

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Guest Joel

Dan,

 

Just a clarification: HR 3718 applies to State and local government employers, not just state employers.

 

What can this website do to ensure that the bill becomes law?

 

If it does become law will it simply be more of the same---with the 403b sharks stalking every local governmental employer in each of the 50 states? If this happens then the current 403b mess will be increased ten fold. God---I hope this doesn't happen!!

 

Or will the 50 state governments set the standard by designing a single statewide plan to which all public employers in a particular may participate in? This would be similar to the 50 statewide pension systems that all state and local governments in a state must contribute to. For example xyz county government/school district/water-sewer district/municipal government entities, etc., do not administer their own pension systems. If they did the State of California would have at least ten thousand public employee pension systems.

 

I would like to see 50 state government sponsored 403(b) programs just like there are 50 statewide retirement systems. The CalSTRS seems to be at the right spot at the right time--- they are already offering a 403b program to every school district in the state of California---so if HR 3718 becomes law they simply need to encourage participation by every local governmental entity in California rather than having a thousand local governments devoured by the 403(b) sharks.

 

Peace and Hope and let's work to ensure the passage of HR 3718,

 

Joel

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Guest Joel

Hi Dan,

 

Here are the stats: As of June 2003 about 18.1 million people were employed by State and local governments. About 4 million of the total were employed by local school districts leaving about 14 million ADDITIONAL people eligible for a 403(b) IF HR 3718 becomes law. THIS MEANS THAT THE 403(b) MARKET WILL EXPAND BY A STAGGERING 350 PERCENT THE MOMENT THE PRESIDENT SIGNS THE BILL INTO LAW. I CLOSE MY EYES AND I SEE THE 403(b) SHARKS SALIVATING!!!

 

Peace,

Joel

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Guest Joel

HR 3718 allows for the expansion of 403b arrangements to state and local government employers not just state employers. Here is the proof.

 

Peace,

Joel

 

------------------------------------------------------------------------------------------------The following is the statutory language for section 403(b)

 

b) Taxability of beneficiary under annuity purchased by section 501©(3) organization or public school

 

 

(1) General rule

 

If -

 

(A)

 

an annuity contract is purchased -

 

(i)

 

for an employee by an employer described in section 501©(3) which is exempt from tax under section 501(a),

 

(ii)

 

for an employee (other than an employee described in clause (i)), who performs services for an educational organization described in section 170(b)(1) (A)(ii), by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing, or

 

(iii)

 

for the minister described in section 414(e)(5)(A) by the minister or by an employer,

 

--------------------------------------------------------------------------------------------

 

Following is the language of the HR 3718

 

108th CONGRESS

2d Session

H. R. 3718

To amend the Internal Revenue Code of 1986 to allow State government employers to contribute to section 403(b) pension plans.

IN THE HOUSE OF REPRESENTATIVES

January 21, 2004

Mr. GOODE introduced the following bill; which was referred to the Committee on Ways and Means

 

A BILL

To amend the Internal Revenue Code of 1986 to allow State government employers to contribute to section 403(b) pension plans.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. CONTRIBUTIONS TO SECTION 403(b) PENSION PLANS ALLOWED BY STATE GOVERNMENT EMPLOYERS.

(a) In General- Clause (ii) of section 403(b)(1)(A) of the Internal Revenue Code of 1986 is amended by striking `, who performs services for an educational organization described in section 170(b)(1)(A)(ii),'.

(b) Effective Date- The amendment made by this section shall apply to years beginning after the date of the enactment of this Act.

-----------------------------------------------------------------------------------------------

 

So if HR 3718 becomes law the relevant provision of section 403(b) will read as follows:

 

b) Taxability of beneficiary under annuity purchased by section 501©(3) organization or public school

 

 

(1) General rule

 

If -

 

(A)

 

an annuity contract is purchased -

 

(i)

 

for an employee by an employer described in section 501©(3) which is exempt from tax under section 501(a),

 

(ii)

 

for an employee (other than an employee described in clause (i)) by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing, or

 

(iii)

 

for the minister described in section 414(e)(5)(A) by the minister or by an employer,

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