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403(b) Plan At Csu

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Hi,

 

I'm new here and haven't finished looking around yet, so hopefully this post isn't redundant or otherwise inappropriate. I work for the California State University and have had a 403(b) for many years, with Fidelity as my investment choice. I'm bothered by the upcoming changes like everyone else, and I certainly don't want to invest through an insurance company. However, it appears that CSU employees may have it better than many of you, as we still have Fidelity as an option, even though the list of available funds is pretty limited.

 

I mention this not to make anyone feel bad, but because I saw a post where someone recommended that Fidelity be contacted and asked why they didn't sign an agreement (ISA). I thought people might like to know that they did sign an agreement with the California State University.

 

Our choices come next year are: AIG, Fidelity, ING, MetLife, and TIAA-CREF. I plan to stay with Fidelity, but the problem is that onlyy one of the five funds I currently use are going to be available. I need to research the new 'offerings' and decide which, if any, to go with.

 

Does anyone else have any investment options, other than annuities via life insurance companies?

 

 

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Hi,

Thanks for your post. Could you do us all a favor and post a copy of the ISA that both Fidelity and TIAA CREF signed. Most of us here work for K12 systems and we are the ones that always get screwed. We are damn frustrated that Fidelity, VG, TRP and TIAA CREF will not sign the ISA from our end. What is the difference between your ISA and ours?

Thanks,

Steve

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Hi,

Thanks for your post. Could you do us all a favor and post a copy of the ISA that both Fidelity and TIAA CREF signed. Most of us here work for K12 systems and we are the ones that always get screwed. We are damn frustrated that Fidelity, VG, TRP and TIAA CREF will not sign the ISA from our end. What is the difference between your ISA and ours?

Thanks,

Steve

 

 

Much more revenue $ from higher paid college staff employees and faculty members and less competition, 5 vendors vs. 140+ in LA school district, raise the profit margins for low cost carriers to make it worthwhile to participate.

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I guess we can also ignore the fact that CSU is flouting state law by limiting vendors. They are in direct violation of 770.3. Why is it that CSU can do an RFP, limit vendors and k-12 cannot? CSU is subject to the same laws that everyone else must abide by and nobody is holding them to account.

 

ScottyD

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Scotty,

We went through this 6 years ago with the deliberations of AB2506. K12 school districts have misinterpreted 770.3 in many ways and nobody has challenged them on that either until ab2506 came along and we know what happened when the insurance industry lobbyists came around.

Steve

 

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I guess we can also ignore the fact that CSU is flouting state law by limiting vendors. They are in direct violation of 770.3. Why is it that CSU can do an RFP, limit vendors and k-12 cannot? CSU is subject to the same laws that everyone else must abide by and nobody is holding them to account.

 

ScottyD

 

 

How do you know the employer is limiting vendors? Maybe these vendors are the only ones who will sign reasonable terms allowed under the AG opinion including hh agreements.

 

 

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How do I know? I saw the RFP and received an e-mail saying as follows:

 

"Scott,

 

Thanks for your inquiry.

 

The CSU is taking the position that while the state legislature has not specifically repealed Insurance Code 770.3, it appears to have been made moot by the new 403(b) regulations effective January 1, 2009, requiring CSU to update its 403(b) program accordingly.

 

Please let me know if you need anything further.

 

Michelle Y. Hamilton

Manager, Benefits & HR Programs

E-mail: mhamilton@calstate.edu

Phone: 562.951.4413"

 

 

I'm pretty sure that the insurance code has not been made "moot" and if so somebody forgot to tell k-12.

 

ScottyD

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How do I know? I saw the RFP and received an e-mail saying as follows:

 

"Scott,

 

Thanks for your inquiry.

 

The CSU is taking the position that while the state legislature has not specifically repealed Insurance Code 770.3, it appears to have been made moot by the new 403(b) regulations effective January 1, 2009, requiring CSU to update its 403(b) program accordingly.

 

Please let me know if you need anything further.

 

Michelle Y. Hamilton

Manager, Benefits & HR Programs

E-mail: mhamilton@calstate.edu

Phone: 562.951.4413"

 

 

I'm pretty sure that the insurance code has not been made "moot" and if so somebody forgot to tell k-12.

 

ScottyD

 

 

I'll leave it up to the lawyers of LA LA Land to figure out what the answer is.

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Hi,

Thanks for your post. Could you do us all a favor and post a copy of the ISA that both Fidelity and TIAA CREF signed. Most of us here work for K12 systems and we are the ones that always get screwed. We are damn frustrated that Fidelity, VG, TRP and TIAA CREF will not sign the ISA from our end. What is the difference between your ISA and ours?

Thanks,

Steve

 

 

Much more revenue $ from higher paid college staff employees and faculty members and less competition, 5 vendors vs. 140+ in LA school district, raise the profit margins for low cost carriers to make it worthwhile to participate.

 

 

LAUSD has over 100,000 employees, about half are teachers and about 5-10% are highly paid administrators. It is one of the biggest employers in Los Angeles County and the State of California. The potential for a low fee company to make money is there. Right now LAUSD has about ten vendors that have signed the ISA, not 140.

 

 

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There's more than 10 companies that have signed LAUSD's ISA...some of them are not on the LAUSD list because they did not receive the additional form that is required from the troubled AIG.

 

AIG and LAUSD have not supplied these companies with the address where the additional form was sent and the tracking numbers for the mailing. It's totally unfair to these companies that were working under executed ISA and had no idea that an additional form was needed.

 

The troubled AIG is the plan administrator and a competing vendor. It benefits them if these companies who went through the trouble of signing ISA's and preparing their companies for the information sharing requirements just a couple of months prior suddenly don't sign the additional form? C'mon.

 

Was any follow up done? I asked Wendolyn Traylor, the benefits manager at LAUSD if any folllow up was done? You know, like a week before the deadline they call the few companies that already have executed ISA's and ask them about the additional agreement. Seems like a logical step. It's an important form right?

 

So the one independent fee based product available suddenly gets removed from the list? It smells.

 

And now it's a fixed annuity saleman's feeding frenzy. A freakin' dream come true:

 

"you've got to start a new TSA"

 

"Oppenheimer is on the list but the market sure is scary isn't it?"

 

"I know, I'm nervous too...how about a fixed index annuity with a nice gmib rider"

 

What were they thinking?

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There's more than 10 companies that have signed LAUSD's ISA...some of them are not on the LAUSD list because they did not receive the additional form that is required from the troubled AIG.

 

AIG and LAUSD have not supplied these companies with the address where the additional form was sent and the tracking numbers for the mailing. It's totally unfair to these companies that were working under executed ISA and had no idea that an additional form was needed.

 

The troubled AIG is the plan administrator and a competing vendor. It benefits them if these companies who went through the trouble of signing ISA's and preparing their companies for the information sharing requirements just a couple of months prior suddenly don't sign the additional form? C'mon.

 

Was any follow up done? I asked Wendolyn Traylor, the benefits manager at LAUSD if any folllow up was done? You know, like a week before the deadline they call the few companies that already have executed ISA's and ask them about the additional agreement. Seems like a logical step. It's an important form right?

 

So the one independent fee based product available suddenly gets removed from the list? It smells.

 

And now it's a fixed annuity saleman's feeding frenzy. A freakin' dream come true:

 

"you've got to start a new TSA"

 

"Oppenheimer is on the list but the market sure is scary isn't it?"

 

"I know, I'm nervous too...how about a fixed index annuity with a nice gmib rider"

 

What were they thinking?

 

 

According to LAUSD there are 16 "approved" vendors. Steve, can you clear up the mystery.

 

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A state bill was passed, AB 2191, that basicly exempted CSU from the 770 regulation that is why K-12 and other colleges are still following the 770 gudelines. It is interesting to read becase they were mentioned directly by name. They sent out an extensive RFP with some very heavy requirements that had to be met before they would even look at product.

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Copy of letter that was sent out to all employees.

Intruder, yes there are 16 vendors that signed to ISA so far.

Steve

 

 

November, 2008

 

Dear LAUSD 403(b) Plan Participant:

 

The Internal Revenue Service has finalized regulations, effective January 1, 2009, that affect all 403(b) voluntary retirement plans. The Los Angeles Unified School District has taken steps to comply with the new regulations. Each 403(b) vendor had to choose whether to remain an eligible plan provider based on their willingness and ability to comply with the new IRS requirements. The following vendors have signed the necessary agreements and are approved vendors:

 

Approved Vendors:

 

AIG Retirement/VALIC

Life Insurance Company of the Southwest

Americo

MetLife

AXA Equitable

Midland National

CalSTRS

Oppenheimer

Great American

PFS Investments, Inc.

Horace Mann

Plan Member Services

Industrial Alliance Pacific

Security Benefit

ING

USAA Insurance Company

 

The approved vendors were not selected by LAUSD. All existing vendors were given the opportunity to comply with the new IRS regulations. Many made business decisions to not sign the agreements. If you have questions or concerns, please contact your vendor.

 

As a current 403(b) participant, you need to verify that your selected vendor is included on the approved vendor list above. If your vendor IS on the approved vendor list, and you want to continue to contribute to your account, no action is necessary.

 

If your vendor is NOT on the approved vendor list, contributions made prior to January 1, 2009 may remain in your account with that vendor. However, no contributions after January 1, 2009 may be deposited into accounts with non-approved vendors. If you wish to continue making 403(b) contributions, you must establish a new account with one of the companies on the approved vendor list above. You may wish to research the offerings and fees of prospective vendors on the STRS website, www.403bcompare.com.

 

After you establish an account with your new vendor, you must issue deduction instructions to LAUSD through the AIG Retirement Manager website, at www.aigretco.com. Both of these steps – establishing your new account and issuing instructions through the AIG Retirement Manager – must be completed by December 9, 2008 if you wish to make a 403(b) contribution on your January paycheck.

 

LAUSD had no choice but to comply with IRS regulations, but we understand that this transition will be difficult and confusing for many employees who are losing their vendors. We urge you to do as much research as possible and consult your financial advisor before you choose a new vendor and especially before moving funds from your existing 403(b) account.

 

Please be aware that if you simply close your old account and withdraw your funds, you will create a “taxable” event and may have to pay substantial taxes and, if you are under 59 ½ years of age, penalties.

 

Please be aware that if you transfer funds from your existing vendor to your new vendor, you may have to pay substantial withdrawal or “surrender” charges, though these vary from company to company.

 

Please be aware that the recent downturn in the stock market, it is easy to unintentionally “lock in” losses. Please consult with your financial advisor to determine how best to protect yourself.

 

Please be aware that “rolling” your funds into an IRA is an option only available to former employees and current employees who are at least 59 ½ years of age.

 

Another possibility to consider is LAUSD’s 457(b) voluntary retirement savings plan. You could open a 457(b) account instead of opening a new 403(b) or in addition to your 403(b) if you want to increase your pre-tax savings beyond the limits that a 403(b) account permits. Please go to www.aigretirement.com for additional information on this program or call AIG Retirement at 1-888-569-7055.

 

You should also be aware of the following aspects of the new IRS regulations:

 

90-24 Transfers: Transfers (movement of investments) to a plan sponsored by another employer and exchanges (movement from one provider to another investment provider) will be permitted, with limitations, only to approved vendors (see list above). Plan to plan transfers (to a new employer) will still be allowed, assuming the new employer plan agrees to receive the exchange.

Catch-Up Provisions: Plan participants who are eligible for both the lifetime catch-up and the age 50 catch-up in the same tax year must first exhaust the lifetime catch-up before making an age 50 catch-up contribution.

Plan Documents: The IRS requires that all plans have a single plan document that describes the key characteristics of the plan and incorporates a Summary Plan Description based on the plan document. This will be available January 1, 2009.

Loan and Hardship Distributions: 403(b) loans are subject to limitations. Hardship distributions are to be administered according to established guidelines provided in the plan document.

 

If you have any questions regarding this important employee notice, please consult your financial advisor or call AIG Retirement at 1-888-569-7055.

 

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A state bill was passed, AB 2191, that basicly exempted CSU from the 770 regulation that is why K-12 and other colleges are still following the 770 gudelines. It is interesting to read becase they were mentioned directly by name. They sent out an extensive RFP with some very heavy requirements that had to be met before they would even look at product.

 

 

Observer,

 

I ask you to kindly read the bill and show me where CSU was exempted from 770.3, they were not. Here is a link to the chaptered bill.

 

This bill basically allowed the state controllers office to administer there program with more flexibility, it did not give any new powers to CSU to ignore existing California law.

 

ScottyD

 

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Hi,

Thanks for your post. Could you do us all a favor and post a copy of the ISA that both Fidelity and TIAA CREF signed. Most of us here work for K12 systems and we are the ones that always get screwed. We are damn frustrated that Fidelity, VG, TRP and TIAA CREF will not sign the ISA from our end. What is the difference between your ISA and ours?

Thanks,

Steve

 

 

I'd post it if I had it, or could find it, but they have not sent it to the employees and the CSU web site has not been updated since the agreements were reached-

 

http://www.calstate.edu/hr/benefitsportal/...3b_impact.shtml

 

If you look at the last sentence in the first paragraphh under New Regulations, it says "... no information sharing agreements exist."

 

Here is the link to where they mention the new fund sponsors as of 2009:

 

http://www.calstate.edu/hr/benefitsportal/tsa/

 

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