All public educational institution employers that sponsor a 403(b) plan must have a written plan that must contain certain mandatory provisions and may contain other optional provisions.
Employers must have adopted a valid 403(b) plan no later than Dec. 31, 2009, which conformed to the operations of the plan for the 2009 plan year. If there was no plan adopted for that year, the employer can contact a TPA or consulting firm to put one in place for that year, referred to as the “paperclip rule.”
The employer also decides which financial advisors and vendors will be a part of the plan for purposes of the investments. Remember, only annuities and mutual funds are permitted as investment options in a public school 403(b) plan.
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.
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