Tip of the Week: Checklist for Amending a 403(b) Plan

Following is a checklist for amending a 403(b) plan for a public educational institution. The general steps to amend a 403(b) plan are:

 

1. Amend your written plan. Once the decision is made for what features you wish to amend:

Commentary: The date that the adoption agreement is executed should be prior to the effective date. For example, if you are amending the plan to include Roth elective deferrals, the effective date should be no earlier than the signature date on the adoption agreement.

 

2. Board resolution. Has your governing board (or party with delegated authority) formally adopted the 403(b) amendment? 

 

Commentary: The IRS has indicated in public comments that the governing board should pass a resolution to adopt the amended 403(b) plan unless the board has previously delegated that authority to a specific key position. Intention is also proven during an IRS audit regarding the intent to amend a plan document. The Board resolution should always go hand in hand with a fully amended Adoption Agreement. An insert page or only a Board Resolution is not sufficient.

 

3. Vendors. Are you amending your plan to add or deselect vendors?  

 

Commentary: Once this has taken place, ask each new vendor for an information sharing agreement. Notify the vendors that are being deselected. Remember they are still part of your Plan.

 

4. Amend the vendor attachment. All 403(b) plans must contain a vendor attachment that outlines all active vendors as well as deselected vendors. Include an effective date on the new attachment.

 

5. Provide information to employees. Update any enrollment materials and other links to information for employees to reflect the new amended plan including the new and deselected vendors.

 

Editor’s Note: This is an occasional feature in the NTSA Advisor. This tip is taken from the 403(b) Plan Sponsor Guide, which is being made available to school districts nationally to assist them in understanding how to improve 403(b) plan participation and savings rates to help employees achieve a comfortable and timely retirement.

 

The 403(b) Plan Sponsor Guide is part of the content contained in the NTSA Certified Retirement Education Specialist (CRES) materials. The NTSA Certified Retirement Education Specialist (CRES) program and designation has been developed in order to equip advisors to be qualified and available to teach the NTSA educational program, which is designed to provide teachers with the basics of planning for retirement and improve their retirement readiness. More information about CRES is available here.