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403(B) New Rules And Regs

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Do the new rules and regs that were imposed by the IRS on 403b's, extend to 457's or were they just intended for 403b's. I believe these were created and implemented for 403b's and not 457's.

 

I am asking because I finally obtained the minimum amount of people needed to add Fidelity as a 457 vendor and I am anticipating in the near future the school district official telling me that Fidelity can't be added because they won't sign the TPA's agreement, who happens to be CPI, the same problem we had with keeping Fidelity and Vanguard in the school district's 403b.

 

To my knowledge, the 457 should not be affected by the new rules and regs that affected the 403b's, am I correct?

 

Thanks

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Do the new rules and regs that were imposed by the IRS on 403b's, extend to 457's or were they just intended for 403b's. I believe these were created and implemented for 403b's and not 457's.

 

I am asking because I finally obtained the minimum amount of people needed to add Fidelity as a 457 vendor and I am anticipating in the near future the school district official telling me that Fidelity can't be added because they won't sign the TPA's agreement, who happens to be CPI, the same problem we had with keeping Fidelity and Vanguard in the school district's 403b.

 

To my knowledge, the 457 should not be affected by the new rules and regs that affected the 403b's, am I correct?

 

Thanks

 

 

Let me take a stab at this. Congrats on getting enough people interested in adding Fidelity.

Whether or not the new regs affect the 403b more than the 457b is beside the point. You already know that Fidelity needs to sign the agreement to share information with your school districts TPA to get on the list. FYI, Fidelity has not signed the agreements with my district's 403b plan for LAUSD, but TIAA CREF and Pension 2 has (if you live in California). On the 457b side, it is doable to get fidelity on the list but its a different process. They also have to sign agreements but it looks like your district does not have an oversight committee for the 457 plan. We have recently got ONE Fidelity's fund on our 457 list, Spartan S&P 500 index to replace the expensive Dreyfus S&P 500 index, but it was a very difficult process. The Dreyfus fund carries revenue sharing costs! (thats another story that I am writing a book).

The 457b plan, at least the one I am most familiar with at LAUSD, has 17 different funds from Vanguard, Dreyfus, American funds, Janus, Pimco and Fidelity, but the difference here is that there is only one or two funds from each company, not the entire company.

Not sure how you district can accept the entire Fidelity mutual fund company in the 457b. Perhaps they can. Have you read the plan document? At LAUSD, there was a conscious decision to steer people away from the 403b and to the 457 because of the 403bs sordid history of insurance products and offer only a diversified selection of lower cost mutual funds.

Guess you need to tell us more about how your 457b is set up by your district. Do they have an oversight committee?

 

Steve

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Steve,

 

There is a sub committe for the school district's 403b composed of school district administrators and from I was told they also oversee the 457.

 

I know that Fidelity has it's own plan document that the school district needs to sign off on. I work for a municipality in Illinois and secured Fidelity as our 457 plan provider and it was very a very easy process. The village attorney looked over the plan documents and then the village clerk signed them, that was it. No issues.

 

I am concerned that either the TPA or the school district will say that there is additional documents that Fidelity will not sign and therefore can not be added, which in my opinion is wrong because all this "paperwork" was a result of the new IRS rules governing 403b's.

 

I believe the school district will treat the 457 like the 403b and even after obtaining the necesary minimum amount of participants, were gonna be told sorry, but I hope I am wrong! Were still waiting for a response from the School District.

 

I'm going to call the TPA to see what they say, thanks Steve....

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Ok for what it's worth, I just called CPI and they said they will not require an Information Sharing Agreement with a 457 Vendor. However, with a 403(b) an Information Signing Agreement is required for a Vendor to do business with the SD.

 

I asked the CPI rep. if it will be as simple as the SD sending them the contributions and they just forward that money to Fidelity, she said yes. She was with the "Vendor" customer service dept.at CPI.

 

I hope she is right and that the school district doesn't throw any obstacles our way by holding the 457 plan to a "higher standard". I'll keep you posted.

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Steve,

 

There is a sub committe for the school district's 403b composed of school district administrators and from I was told they also oversee the 457.

 

I know that Fidelity has it's own plan document that the school district needs to sign off on. I work for a municipality in Illinois and secured Fidelity as our 457 plan provider and it was very a very easy process. The village attorney looked over the plan documents and then the village clerk signed them, that was it. No issues.

 

I am concerned that either the TPA or the school district will say that there is additional documents that Fidelity will not sign and therefore can not be added, which in my opinion is wrong because all this "paperwork" was a result of the new IRS rules governing 403b's.

 

I believe the school district will treat the 457 like the 403b and even after obtaining the necesary minimum amount of participants, were gonna be told sorry, but I hope I am wrong! Were still waiting for a response from the School District.

 

I'm going to call the TPA to see what they say, thanks Steve....

 

 

 

Ft6,

 

And while you are at this, find out when the committee meets and go. All of the players will be there to answer your questions and tell them that you don't want them treating the 457b plan like the 403b. It will be interesting what there response will be. Also, tell them that LAUSD has a committee composed of employees with voting rights, what not your district? Only say this if you are willing to become a member and I think you should be a member. One thing I have learned in all of these years of advocacy is that you cannot depend on somebody else to do this for me. NEVER! It would be nice to find out what other oversight committees are doing. I have yet to hear of any other teachers or other employees posting on these boards who are members of oversight committees. I think you can press the issue and ask your district to have employees as voting members. I believe its California law that requires one here. But I am not sure.

 

Let us know what you find out,

Steve

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