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JudyS

Information Sharing Agreement

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Fellow Travelers:

Today I was provided with a copy of the Information Sharing Agreement (ISA) that our district is soon sending to the legal department for review. If approved, it will be "presented" as part of the District's plan to meet the requirements of the new regulations. No representatives from either classified or certified staff were involved in thinking this through in our district as far as I know. (Apparently I have been stonewalled! Surprise!) Also, I am guessing this ISA will be widely used across the country.

 

So let me run this by you for your comment. According to the information therein, this document was "co-created by members of the Association of School Business Officials (ASBO) International and Pennsylvania Association of School Business Officials (PASBO)." According to the Acknowledgement, The PASBO 403(b) Regulation Task Force had members from some districts and PASBO as well as people from Lincoln Investment Planning, Inc., AXA, and VALIC. The ASBO International 403(b) Retirement Plan Council included representatives from ING, AXA, MetLife, TSA Training and Consulting, the Employee Benefits Council, representatives from ASBO and representatives from 3 school districts.

 

What do you think?

 

JudyS

 

BTW, it brings to mind the fact that for many years I had a sign in my office with one of my favorite cautions: NEVER TRY TO TEACH A PIG TO SING. IT WASTES YOUR TIME AND ANNOYS THE PIG.

 

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A few comments:

 

If I were a vendor (and I understand that vendors had a heavy hand in writing this) I would have a problem signing a document that requires me to sign a document in the future....that I can't review now....section 8. This agreement assumes the vendor will be a plan provider (an ISA is only needed for exchanges outside the plan, not for "mere changes of investment" within the plan - of which the plan would have its own information sharing), what if the vendor doesn't want to sign on to the plan document when they see it?

 

It also seems to me that one would want to know specifically what information (the language leaves it open to include anything) and how that information is to be shared. How does the employer want to share information? Is it via a spreadsheet or via a website or a does the employer expect the vendor to subscribe to some yet to be developed aggregation provider? The agreement is an agreement to share information - but it doesn't specify how.

 

If its any consolation - I've yet to see an ISA that does specify "how" information is to be exchanged...I don't think anybody knows.

 

The link for the ISA is:

 

http://www.asbointl.org/ASBO/files/ccLibra...g_Agreement.pdf

 

I will say this - some smart people worked on this agreement, but most of them are highly associated with industry vendors. Having said that, it doesn't appear that this agreement totally favors the vendor, but then again, I'm not an attorney.

 

I don't see the point of a separate ISA as they are not required (in isolation) for Plan Providers - at least according to my understanding from Bob Architect at the most recent NTSAA conference. Plan Providers, by signing onto "The Plan" will have information sharing requirements that will mirror what is in the ISA, but it will be part of the plan. Those providers that aren't going to sign onto the plan, shouldn't be allowed to sign an ISA, which makes the ISA useless.

 

Very confusing stuff.

 

ScottyD

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There are many reasons why a SD would want an ISA. For example, if employees make contributions between 2005-2008 to vendors where the contributions cease before 2009, the SD could request ISAs from the vendors to facilitate loans and distributions from these contracts beginning 1/1/2009.

 

Most SDs are going to rely on ISAs created by some group because they dont have the time or resources to prepare these agreements on an individual basis.

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Just a few thoughts to throw into the mix. As Scott mentioned the concept of information sharing is largely that, conceptual, there is still plenty to be determined how this will happen in real life post 1/1/09.

 

The reg's in their methodology say if you are an approved vendor you do not need to sign an ISA. But there is obviously still need to share information so that operation of such plan features like loans, hardships etc can occur. This will be covered within the service provider agreement that must/should be signed by an approved vendor and either the sd or tpa acting on behalf of sd.

 

ASBO addressed, and any service provider agreement should address, information sharing within the document for approved vendors to sign. Their sample agreement is at

 

http://asbointl.org/ASBO/files/ccLibraryFi...e_Agreement.pdf

 

In reality a school district should have two signed documents, a service provider for "approved" vendors and an ISA for non-approved exchange only vendors (and possibly orphaned accounts).

 

Here is a few questions i would like to hear thoughts on. Why would a sd want to deal with a non-approved vendor, and why would a vendor want to deal with a plan sponsor that they have no association with?

 

Pat

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Fellow Travelers:

 

So I am confused. I thought that I read here about Vanguard's reluctance to sign any ISA other than the one they created.... so assumed it would be a requirement of all vendors within a sponsor's plan. The District is also using plan, interestingly titled "Model Plan Language" with the school district's name attached, developed by PASBO and ASBO.

 

Is anyone aware that LOTS of districts are using these? Is anyone aware whether any of the no-load families will sign on with districts that are using these documents?

 

JudyS

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Confusion is and will be unfortunately the order of the day for a while. But some believe and i agree that after growing pains (3-5 years), clarification and probably a few mistakes along the way there will be improvement for all involved.

 

Regarding vg (or any vendor) and the isa, they only have to sign that if they are not a currently approved vendor.

 

Let's assume they are an approved vendor. What they will be presented is a service provider agreement, that will include information sharing requirements. They will have to sign that to remain an approved vendor. The goal of this is to provide structure to a very unstructured plan, that some have abused in the past.

 

In my experience vg years ago would never sign a service provider agreement, but recent years they have been more open to it. I can not speak on if this will change moving forward.

 

Keep in mind part of the irs' biggest issue are abuses by particiapants/sponsors/vendors in regards to hardships and loans. Please someone correct me if they believe i am wrong, but i do not believe vg offers through their 403b hardship ability and loans. Therefore, they can't share info on what they do not offer, so i am not sure they will have issue agreeing to what they have in recent years had comfort with.

 

With that said it appears they are taking a very limited effort to all of this, almost to the point that if they can stay in the market without offering help to sponsors they will, but if pressed they will decline.

 

Is it really that horrible for any vendor to take some accountability beyond just scooping monies?

 

I do not believe Fidelity or T Rowe are expressing concerns with service provider agreements at this time. The biggest issue for most is shear volume of documentation and variances that have to be looked through.

 

Pat

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