The Financial Industry Regulatory Authority (FINRA) has issued an interpretive letter agreeing to exclude the NTSA’s Model Disclosure Form from various filing requirements under FINRA Rule 2210. This marks a significant milestone for the NTSA’s effort to ensure that public school employees receive the same important retirement plan information that is provided to their peers in the private sector.
On March 22, 2016, FINRA issued its interpretive letter. That letter, coupled with the issuance of a no-action letter by the Securities and Exchange Commission (SEC) on Feb. 18, 2015, is the final regulatory step to providing a simple, standardized way for disclosing important investment fee, expense and compensation information across certain investment products, in a way that is easy for consumers to understand.
In 2011, NTSA launched the 403bOpen initiative in partnership with the National Education Association’s Member Benefits Corporation (NEA Member Benefits), which works for 3 million members in public education. Broadly, this initiative was necessary to ensure that public school employees receive the same important information about their retirement plan accounts as employees of private education institutions. The 403bOpen project consists of two components: the Model Disclosure Form and the 403bOpen website.
The data collected in the Model Disclosure Form closely mirrors the requirements under the Department of Labor’s 404a-5(d) regulation for retirement plans covered by ERISA, but the Model Disclosure Form is designed to cover non-ERISA retirement plans. The 403bOpen website is the engine for delivering this important information to plan participants. The 403bOpen website was developed by NTSA strategic partner AdminPartners LLC, a third party administrator based in Cherry Hill, N.J., that specializes in administering retirement plans for public-sector and not-for-profit organizations.
The 403bOpen system will provide a universal database where investment providers supply the required disclosure information that can be reviewed as available investment options by a public school district or third party administrator. What’s more, 403bOpen provides the critical fee, expense and compensation information in an intuitive and easy-to-understand dashboard that lets plan participants easily compare and drill down into available investment options.
403bOpen goes beyond other passive online disclosure systems. In order to be compliant with the SEC and FINRA letters, plans must actively distribute relevant information to eligible plan participants at least annually, and every participant will be provided clear disclosures of all fees, expenses and compensation, both at the point of initial investment and annually thereafter.
Although NTSA has focused on disclosures for public school 403(b) plans, the two letters extend the relief to other retirement plans not covered by ERISA, including, but not limited to, 401(a), 457 and 415(m) retirement plans.
The immediate benefit for all public education employees will be that their non-ERISA retirement plans can now provide the same important retirement plan information that participants in 401(k) plans are already receiving. Investment providers serving public employers participating in the 403bOpen initiative will be required to provide uniform disclosure of fees, charges and compensation related to 403(b) investment options. This project exemplifies NTSA’s steadfast commitment to professional best practices and participants’ financial education.
NTSA is grateful for the support of NEA Member Benefits, the American Society of Pension Professionals and Actuaries (ASPPA) and our parent organization, the American Retirement Association. These organizations made it possible to reach this important milestone. NTSA also appreciates the hard work of Groom Law Group, NTSA’s legal representation in this matter.
Ray Harmon, Esq. is government affairs counsel for NTSA.
On March 22, 2016, FINRA issued its interpretive letter. That letter, coupled with the issuance of a no-action letter by the Securities and Exchange Commission (SEC) on Feb. 18, 2015, is the final regulatory step to providing a simple, standardized way for disclosing important investment fee, expense and compensation information across certain investment products, in a way that is easy for consumers to understand.
In 2011, NTSA launched the 403bOpen initiative in partnership with the National Education Association’s Member Benefits Corporation (NEA Member Benefits), which works for 3 million members in public education. Broadly, this initiative was necessary to ensure that public school employees receive the same important information about their retirement plan accounts as employees of private education institutions. The 403bOpen project consists of two components: the Model Disclosure Form and the 403bOpen website.
The data collected in the Model Disclosure Form closely mirrors the requirements under the Department of Labor’s 404a-5(d) regulation for retirement plans covered by ERISA, but the Model Disclosure Form is designed to cover non-ERISA retirement plans. The 403bOpen website is the engine for delivering this important information to plan participants. The 403bOpen website was developed by NTSA strategic partner AdminPartners LLC, a third party administrator based in Cherry Hill, N.J., that specializes in administering retirement plans for public-sector and not-for-profit organizations.
The 403bOpen system will provide a universal database where investment providers supply the required disclosure information that can be reviewed as available investment options by a public school district or third party administrator. What’s more, 403bOpen provides the critical fee, expense and compensation information in an intuitive and easy-to-understand dashboard that lets plan participants easily compare and drill down into available investment options.
403bOpen goes beyond other passive online disclosure systems. In order to be compliant with the SEC and FINRA letters, plans must actively distribute relevant information to eligible plan participants at least annually, and every participant will be provided clear disclosures of all fees, expenses and compensation, both at the point of initial investment and annually thereafter.
Although NTSA has focused on disclosures for public school 403(b) plans, the two letters extend the relief to other retirement plans not covered by ERISA, including, but not limited to, 401(a), 457 and 415(m) retirement plans.
The immediate benefit for all public education employees will be that their non-ERISA retirement plans can now provide the same important retirement plan information that participants in 401(k) plans are already receiving. Investment providers serving public employers participating in the 403bOpen initiative will be required to provide uniform disclosure of fees, charges and compensation related to 403(b) investment options. This project exemplifies NTSA’s steadfast commitment to professional best practices and participants’ financial education.
NTSA is grateful for the support of NEA Member Benefits, the American Society of Pension Professionals and Actuaries (ASPPA) and our parent organization, the American Retirement Association. These organizations made it possible to reach this important milestone. NTSA also appreciates the hard work of Groom Law Group, NTSA’s legal representation in this matter.
Ray Harmon, Esq. is government affairs counsel for NTSA.
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