This article originally ran on September 22, 2015.
By Diane Capone
Guidelines for sharing participant data of 403(b) and governmental 457 plans provided by the SPARK Institute have been widely accepted and are used by the majority of plan vendors. They were first released in 2008 and have been updated from time to time since then. This latest 1.04 version incorporates content from the 403(b) Plans Information Sharing Data Elements Questions & Answers to ensure that the best practices are updated with the most recent technical information. In addition, certain terms and definitions were clarified to improve data consistency and common understanding among users.
The purpose of the revision is to provide more specificity concerning the data to be shared between providers to assist users who are newly adopting the best practices, or as a reference for existing users. The data elements were not changed in this release. This update is effective as of August 17, 2015 and all prior versions of the best practices (i.e., Version 1.03 and all earlier versions) will be considered obsolete.
The SPARK data elements are transmitted on a weekly basis (or as required) from the various vendors servicing the employers’ 403(b) and 457 plans to their third party administrators, who aggregate the information in order to provide the employer with information required for the administration and compliance of their plans. The data provided includes contributions, transfer, exchange, loan, distribution and other information on each participant. Most employers are aligned with third party administrators who take on the responsibility for aggregating the SPARK information that is transmitted by the multiple vendors, and are therefore in a position to approve various plan transaction requests from participants.
The best practices provide the data elements for information sharing between 403(b) plan employers or employer representatives and vendors. The data to be shared applies to 403(b) plans as well as any associated plans including 401(a), 401(k), 457(b) governmental, etc. sponsored by the same employer. This information is provided in a basic file convention layout. This basic file convention layout was not changed in the August 2015 release.
The best practices were developed for purposes of facilitating compliance with the final 403(b) regulations by identifying the specific data elements necessary to coordinate plan administration. Additionally, the best practices are offered with a view to facilitating uniform expectations among 403(b) vendors and employers who will be engaged in data sharing and to facilitate efficient information technology design and development. This document originally consisted of four parts. However, as explained below, Part III has been moved to a separate document.
- Part I — Identifies conventions in formatting and providing data that applies to all of the data elements identified in the Best Practices.
- Part II — Identifies and describes the data elements.
- Part III — This part, which covered census and remittance processing practices, has been removed from this document and published as a separate document entitled “Best Practices for Multiple Vendor Plans Remittance and Census Data Elements.”
- Part IV — Describes the data standards for distributions. In addition to loans and hardship withdrawals, other distribution types including contract exchanges, in-service withdrawals, rollovers, deaths, disability, required minimum distributions, QDROs and separation from service are supported.
Diane D. Capone, CEBS, TGPC is a member of the NTSA Communications Committee and Sr. Retirement Compliance Consultant for Lincoln Investment, Registered Investment Advisor, Broker/Dealer, Member FINRA/SIPC
Please note that this article is for general informational purposes only and is not intended to be taken as legal advice or a recommended course of action in any given situation. Readers should consult their own legal advisor before taking any actions suggested in this article.
Opinions expressed are those of the author, and do not necessarily reflect the views of NTSA, or its members.