2008 Deadline for Nonprofits to Update Their 403(B) Plans
on: May 6, 2008, 8:58 am
Release Author: Lamaute Capital, Inc.- InvestSafe.com
Release Summary: By year end 2008, most nonprofit employers will
need to update their 403(b) retirement plan in order to comply
with the new 403(b) regulations.
Release Body: By year end 2008, most nonprofit employers will
need to implement a number of changes to both the design and administration
of their 403(b) retirement plan in order to comply
with the new IRS regulations governing these plans. The consequences
of not complying with the new regulations can be severe and may
even disqualify the plan, according to Lamaute Capital,
Inc. an investment firm specializing in retirement plans.
the new 403(b) requirements are that the plan
must be in writing and contain the provisions relating to eligibility,
benefits, distribution availability and other limitations, and
information relating to the annuity contracts or custodial agreements
used by the plan.
new 403(b) regulations will likely increase the
paperwork, cost of administration, and potential fiduciary liabilities
associated with maintaining a 403(b) plan to the point that it
may make sense for some nonprofits, especially smaller ones, to
switch from a 403(b) to a 401(k) plan.
of the advantages with a 401(k) is that plan sponsors can use
pre-approved 401(k) plan documents. With a 403(b), on the other
hand, plan sponsors that want approval for their plan from the
IRS must go through a private letter ruling, a process that can
be expensive and time consuming. Also it is easier to find ongoing
support and software related to administering a 401(k) because
the 401(k) is a more widely used plan than the 403(b).
employers such as associations and other tax-exempt organizations
are allowed by law to have a 401(k) plan. A 401(k) can be designed
to accept contributions solely from the employee’s salary
if the employer chooses not to match those contributions.
suggests that now is a good time for nonprofits to look at updating
their 403(b) plan or even consider switching altogether to a 401(k).
They will prepare a free 401(k) plan proposal for organizations.
Details: 1940 Duke St.
Alexandria, VA 22314