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Lausd Vender List, Fidelity Grandfatherd?

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I just checked my lausd personal retirement site. That's where you change vendors, contributions etc.

It had my next deduction date as 1/4/08, listed the new vendors and at the bottom of them showed I was in Fidelity 100% with a notation (3) it was grandfathered.

 

Anyone else seen this that has Fidelity? How could this be w/o signing the new agreement. Now I think I'll just wait and see what happens.

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My site with LAUSD does not list Fidelity as an option. I hope I didn't lose the option of being Grandfathered in with Fidelty because I chose CALstrs a couple days ago in response to the letter that we needed to change vendors.

 

One interesting thing is; we seem to be able to allocate percentage to each vendor from the "Retirement Manager". Perhaps we can pick and chose the best options from each vendor as long as we set up accounts at each.

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DaveG: Two questions:

 

1) Are you currently making contribution (Dec 5th 2008 Paycheck) into Fidelity?

2) Does Fidelity option re-appear if you cancel your pending CalSTRS choice?

 

 

I, like LAUSDFred, see the "Fidelity Grandfathered" visible at the bottom of the list when I log in. I am currently contributing 100% to Fidelity and have not canceled future Fidelity contributions. I even increased my total dollar amount into Fidelity for Jan 2009 and beyond.

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1) Are you currently making contribution (Dec 5th 2008 Paycheck) into Fidelity?

 

I assume I am. I have not changed any dollar amount.

 

 

2) Does Fidelity option re-appear if you cancel your pending CalSTRS choice?

 

Yes. I cancelled and Fidelity reappeared with the 3 superscript saying it's grandfathered. Common sense says that means we'll be able to continue contributing with Fidelity...but this is LAUSD. Every other indication is that Fidelity is no longer available. Perhaps we can find someone who was with one of the other discontinued Vendors and see what their Retirement Manager page looks like. Or, I guess we can just wait and see.

 

 

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I Googled, "403b grandfathered" and "403b isa grandfathered" and found this among many other references: http://www.neamb.com/savings/ImpactoftheNe...nNEAMembers.pdf Once you open the document, search for the word "grandfathered".

 

It appears possible that somewhere within the new 403b regulations it allows us to continue with 403b contributions to "grandfathered" companies that have not entered into the new ISA's with the district.

 

It appears it's at the district's discretion to forward the salary deferrals to grandfathered companies, however. But if they decide to do so, but the contributions fall under all the usual 403b guidelines - and I assume this to mean, tax deductible, etc, etc.

 

Of course, my interpretation may be a load of hooey as well. (Smile)

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DaveG, Et al:

 

Even more encouraging, I found this on the UMass web site:

 

 

What is a University "grandfathered" provider relationship?

 

The University has allowed certain employee/provider relationships to continue even though the providers are no longer approved providers for the University’s 403(b) plan. The University’s policy concerning these relationships has been to allow an employee to make contributions to a grandfathered 403(b) provider for as long as they maintain an active 403(b) account with the grandfathered provider. The University considers a 403(b) account as being active as long as a 403(b) payroll deduction for that account is currently being taken out of the employee's pay check. Once the 403(b) payroll deduction is discontinued, the 403(b) account is no longer considered an active account and the relationship with the provider is no longer considered grandfathered.

 

It can be found at this link http://www.massachusetts.edu/treasurer/faq.cfm#15

 

I assume this is what LAUSD is doing for us with Fidelity: Don't stop that contribution.

 

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Fred,

1/04/08?

Steve

 

 

 

That is my next deduction date.

 

My site with LAUSD does not list Fidelity as an option. I hope I didn't lose the option of being Grandfathered in with Fidelty because I chose CALstrs a couple days ago in response to the letter that we needed to change vendors.

 

One interesting thing is; we seem to be able to allocate percentage to each vendor from the "Retirement Manager". Perhaps we can pick and chose the best options from each vendor as long as we set up accounts at each.

 

 

Ye, I saw that too and it seems contrary to the rules when I first set up my account.

 

DaveG, Et al:

 

Even more encouraging, I found this on the UMass web site:

 

 

What is a University "grandfathered" provider relationship?

 

The University has allowed certain employee/provider relationships to continue even though the providers are no longer approved providers for the University’s 403(b) plan. The University’s policy concerning these relationships has been to allow an employee to make contributions to a grandfathered 403(b) provider for as long as they maintain an active 403(b) account with the grandfathered provider. The University considers a 403(b) account as being active as long as a 403(b) payroll deduction for that account is currently being taken out of the employee's pay check. Once the 403(b) payroll deduction is discontinued, the 403(b) account is no longer considered an active account and the relationship with the provider is no longer considered grandfathered.

 

It can be found at this link http://www.massachusetts.edu/treasurer/faq.cfm#15

 

I assume this is what LAUSD is doing for us with Fidelity: Don't stop that contribution.

 

 

 

DaveG,

 

Thanks for the research. I plan to stay w/ Fidelity. There could be many devious reasons why lausd left this info off the letter they sent. Maybe we should be ready to fight it if they try to stop it. But I think our chances are at least 50/50 since it is on the web sight.

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DaveG, Et al:

 

Even more encouraging, I found this on the UMass web site:

 

 

What is a University "grandfathered" provider relationship?

 

The University has allowed certain employee/provider relationships to continue even though the providers are no longer approved providers for the University’s 403(b) plan. The University’s policy concerning these relationships has been to allow an employee to make contributions to a grandfathered 403(b) provider for as long as they maintain an active 403(b) account with the grandfathered provider. The University considers a 403(b) account as being active as long as a 403(b) payroll deduction for that account is currently being taken out of the employee's pay check. Once the 403(b) payroll deduction is discontinued, the 403(b) account is no longer considered an active account and the relationship with the provider is no longer considered grandfathered.

 

It can be found at this link http://www.massachusetts.edu/treasurer/faq.cfm#15

 

I assume this is what LAUSD is doing for us with Fidelity: Don't stop that contribution.

 

Could Scotty and the other pros out there please explain what the heck is going on here? This is the first that I have heard of this being possible.

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LA Teacher and AP,

I have requested that this issue be put on the agenda for our next oversight committee meeting. I will let you know.

AP, yes I have never heard about a grandfathered feature either and still keep contributing after 01/01/09. This cannot be possible until Fidelity signs the ISA agreement. As of today, Fidelity has not signed the agreement. Here is the latest updated list.

 

AIG Retirement/Annuity

Americo

Axaequitable life insurance company

CalSTRS (Annuity)

CalSTRS (Mutual fund)

Great American Life ins. Company

Horace Mann Life Insurance Co

ING

ING Reliastar/Northern Life Ins. Co.

Industrial Alliance Pacific

Life Ins. of the Southwest

Metropolitan Life Insuarance Co.

Midland National Life Ins.

Oppenheimer Funds Services

PFS Inestments

Plan Member Services

Security Benefit Ins. Co.

TIAA CREF

USAA Insurance Company (Annuity)

USAA Investment Management (Mutual Fund)

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It's my understanding (and please tell me if I'm wrong) that no more companies will be added to the list. There are many companies right now that are not only willing to sign the ISA but already have signed the ISA that are not allowed on the list.

 

Mr. Schullo, I believe you have received the signed ISA from FTJ fundchoice via Scottyd as proof that this is going on.

 

There seems to be a double standard. LAUSD says that absolutely no other companies will be added to the list as of 10/17/08...and then they add Tiaa-Cref on 11/14/08. LAUSD is not willing to explain why Tiaa-cref was given this courtesy and other companies have not.

 

So how can Fidelity be added now "if" they sign the ISA. I think they will have to wait until 1st qtr '09 when they may open it up to more companies.

 

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It's my understanding (and please tell me if I'm wrong) that no more companies will be added to the list. There are many companies right now that are not only willing to sign the ISA but already have signed the ISA that are not allowed on the list.

 

Mr. Schullo, I believe you have received the signed ISA from FTJ fundchoice via Scottyd as proof that this is going on.

 

There seems to be a double standard. LAUSD says that absolutely no other companies will be added to the list as of 10/17/08...and then they add Tiaa-Cref on 11/14/08. LAUSD is not willing to explain why Tiaa-cref was given this courtesy and other companies have not.

 

So how can Fidelity be added now "if" they sign the ISA. I think they will have to wait until 1st qtr '09 when they may open it up to more companies.

[/quote

 

 

 

Fidelity is not on the published list so you can't choose them. It only shows up if you currently have Fidelity and then it says it's grandfathered in. Maybe using the prior agreement. There was no way to send the list out. I made a copy and will scan it and send it to the site.

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It's my understanding (and please tell me if I'm wrong) that no more companies will be added to the list. There are many companies right now that are not only willing to sign the ISA but already have signed the ISA that are not allowed on the list.

 

Mr. Schullo, I believe you have received the signed ISA from FTJ fundchoice via Scottyd as proof that this is going on.

 

There seems to be a double standard. LAUSD says that absolutely no other companies will be added to the list as of 10/17/08...and then they add Tiaa-Cref on 11/14/08. LAUSD is not willing to explain why Tiaa-cref was given this courtesy and other companies have not.

 

So how can Fidelity be added now "if" they sign the ISA. I think they will have to wait until 1st qtr '09 when they may open it up to more companies.

 

 

Under the 403b regs there is a difference between a provider's contracts being designated under the plan and a provider who signs an ISA.

 

A provider whose contracts will be designated as funding options for contributions made under the 403b plan under reg 1.403b-3 will sign the necessary agreement with the employer to provide information and adhere to the terms of the plan. The providers must be designated under the plan before they can accept contributions from the employer.

 

According to Q2, Part VI of the 403b FAQs ISA are only required for those providers under the 403b plan who will not be receiving contributions under the terms of the 403b plan on or after 1/1/09. ISAs are more limited agreements under reg -10(b) in which a provider and employer agree to share information necessary on any loans taken out and any hardship withdrawals elected by the plan participant in order for the plan to properly limit the amount of loans and restrict employee contributions as well as to enforce distribution restrictions. Under the regulation, providers who sign ISAs are only allowed to accept an exchange of funds from a 403b contract which is designated under the plan. The only consequence of a provider who is not designated to receive contributions and has not signed an ISA on 1/1/09 is that an exchange of funds will not be permitted to be made from 403b contracts designated under the plan to that provider.

 

There is nothing in the regulations that prohibits a "grandfathered provider" from receiving contributions if they are no longer an approved provider under the plan. As explained so elegantly in Part II, Q1 of the FAQs

 

"However you'll notice that the 403b regulations never use the word plan document because it is the belief that this plan could be subject of a number of items either stapled together or held together by a big paperclip."

 

"For example, the plan can be composed of a salary reduction agreement, the varous contracts that fund the plan, as well as administrative procedures regarding who is eilgible, how benefits are made available, and what the dollar limitations are."

 

In other words, the employer can enter into an agreement with a provider that will limit contributions to be made to the provider beginning 1/1/09 to those employees making contributions to that provider as of 12/31/08 which will be part of the 403b "plan". Whether that provider is an approved provider is irrevelant.

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Intruder,

 

Whew! If I'm reading you correctly, you are saying that it is indeed possible for, say, Fidelity to be grandfathered in for those employees who have been currently investing in that company.

 

Do I read you correctly? Does anyone else want to confirm or deny this?

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