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Model 2 - Actively Sponsored 403(b)

Review Your Plan, and Takes Actions as Necessary

The Actively Sponsored 403(b) model (Model 2) is the simplest model to bring into compliance with the final 403(b) regulations. In fact, most plans in this model are already in compliance.

To comply with 403(b) regulations, the following action should be considered now, if not already completed, for Actively Sponsored 403(b) plans:

  • Review Your Plan Document - The plan document must be reviewed to ensure the rules under the final regulations are appropriately addressed. In particular, all 403(b) documents must include:
    • Eligibility requirements in light of the universal availability rules;
    • Provisions regarding distributions, loans, and transfers. Particular attention must be given to the regulations as they apply to all investment options allowed under the plan document; and
    • Identification of the party or parties responsible for compliance of the various components of the 403(b) arrangement.
  • Review of Operations - Plan sponsors must ensure their administrative procedures align with what is stated in their plan and contract documents (if applicable), and have appropriate oversight of plan operations in place.
  • Be Aware of New Form 5500 Requirements - Beginning with 2009 plan years, all ERISA 403(b) plans must file a full Form 5500 that recognizes all assets[1] under the plan. In general, plans with 100 or more participants must also meet 5500 audit requirements.
  • Review Current Investment Arrangement - Review the current plan document, operational procedures and investment arrangement to ensure that there are no contradicting provisions. For example, ensure plan events such as distributions, loans, or fiduciary direction provisions between the plan document, operational procedures, and terms of the investment arrangement are in agreement.

The Principal Financial Group® can help plan sponsors and their advisors with their 403(b) plan needs. Our experience in the not-for-profit marketplace since 1963 positions us as a leader in providing thought capital and solutions to 403(b) plans. For more information, contact your financial professional or local representative of The Principal®.

[1]
Certain assets of a plan may be disregarded for Form 5500 and audit purposes as detailed in DOL Field Assistance Bulletin 2009-02 and 2010-01.

While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company, a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

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