School District 403(b) Plans and Investment Selection

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email

 

When it comes to 403(b) plans of California school districts or charter schools, there is confusion about the ability of the sponsoring district or charter school to limit the participant’s ability to select a particular insurance provider for their tax-sheltered annuity (TSA). On the one hand, there is a provision of the California Insurance Code which provides that if a TSA “is to be placed or purchased for an employee, the employee shall have the right to pick the insurance agent, broker or company through whom… the… annuity [will be placed].” On the other hand, you have employers and plan fiduciaries who are trying to provide more competitive benefits, while controlling fiduciary liability and plan administrative burden. The bottom line is that many public school district and charter school employees in California mistakenly believe that they are entitled to select the TSA provider of their choice simply because they are allowed to direct the investment of their plan account.

Continue reading

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email
Posted in 403(b), Fiduciary Responsibilities, Plan Administration, record-keeping | Tagged , , | Leave a comment

What Is a Section 415(m) Plan, and When Might You Need One?

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email

Because both the Internal Revenue Code (Code) and PEPRA sometimes “conspire” to limit the retirement benefits of public agency employees in ways that make it harder for affected agencies to hire and retain certain individuals, it may become necessary for those agencies to consider the use of a section 415(m) plan.

Continue reading

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email
Posted in 401(a), Governmental Benefits, PEPRA | Tagged , | Leave a comment

What Happens to Participants’ 457(b) Deferral Elections When they Pass Away?

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email

Just the other day, a public agency client contacted us to find out what to do with a participant’s 457(b) plan deferral election following the participant’s untimely death due to COVID. As with most cases, cities and special districts would owe the former employee (or the employee’s estate) significant amounts of unpaid wages, overtime, or unused PTO. And, although the W-2 reporting and FICA/Medicare tax withholding are discussed in the W-2 Form instructions, it isn’t always clear whether to withhold 457(b) deferral elections based on the form currently on file.

Continue reading

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email
Posted in 457(b) Plans, Fiduciary Responsibilities, Income Tax, Plan Administration, record-keeping, Uncategorized | Tagged , , | Leave a comment

Why a Public Agency Might Want to Add a 401(a) Plan

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email

The vast majority of public agencies already maintain a 457(b), or eligible deferred compensation plan. A much smaller number also maintains one or more 401(a) plans in addition. This post discusses some of the reasons a public agency might want to add a 401(a) plan to its employee benefits lineup.

Continue reading

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email
Posted in 401(a), 457(b) Plans, Governmental Benefits, PEPRA, Plan Administration, Plan Compliance, Plan Qualification, Social Security | Tagged , , , | Leave a comment

Understanding the Difference Between Contributions and Allocations In Public Agency Plans

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email

Most public agency defined contribution plan sponsors can easily recall the current amount being contributed to participants in their plan; however, not all can tell you “how” the contribution is being allocated amongst the participants. The distinction between a “contribution” and an “allocation” is very important at the participant level because it doesn’t matter how much an employer is contributing to its plan, if a participant is not eligible for an allocation (or share) of that contribution.

Continue reading

Share this...
Share on LinkedIn
Linkedin
Print this page
Print
Email this to someone
email
Posted in 401(a), 457(b) Plans, Governmental Benefits, Plan Administration, Plan Compliance, Plan Qualification | Tagged , | Leave a comment