School board reviews retirement rules

Superior school board members Monday reviewed options to comply with federal 403b retirement regulations.

School districts have three, said Jill Snyder, 403b expert with National Insurance Services.

The plans are retirement saving arrangements offered by public school districts and other tax-exempt organizations for their employees, according to the U.S. Department of Treasury Web site.

The new regulations are an effort by the Department of Treasury and Internal Revenue Service to align 403b savings plans more closely to 401k plans in the private sector.

The regulations go into effect in January. Snyder explained the changes and options for compliance to the school board Monday night.

The regulations will require public employers to monitor 403b funds and report any activities with tax implications to the IRS as private employers do with 401k plans.

The new regulations require school districts to develop a written plan document; monitor loans, contribution limits, hardship withdrawals, transfers and exchanges; and make the plan available universally to all eligible employees and notify them of their right to save, Snyder said.

School districts and other non-profit entities that offer 403b saving options have never had these responsibilities in the past. This is the first change to 403b regulation since 1961, resulting from abuses of the system, she said.

“This is a new ball game that we’re all required to play under,” she said.

School districts across the state are developing plans for compliance with the new obligations, Snyder said.

About 300 of 700 Superior school district employees eligible for 403b plans save for retirement using 23 different 403b vendors.

Districts have three options for compliance. They can switch to a one-party 403b vendor, hire a third-party monitor to work with current vendors or monitor the funds themselves, she said.

The first and second options would be cost effective for the district since no district employees would be doing the work and the district could pass liability for errors to the monitoring agent, Snyder said.

If a district chose to do the monitoring in-house, it could not pass on the liability and would have to pay employees to monitor the funds, she said.

Option two and three are complicated by the need for information sharing agreements between 403b vendors and employers. Some 403b providers are refusing to sign information sharing agreements, which means school districts will be unable to continue working with them under the new regulations, Snyder said.

With the one-party option, the information sharing agreement isn’t necessary because the same party providing the funds is doing the monitoring. Employees could continue saving with a variety of fund options because one-party providers allow districts about 40 funds for employees to choose from, she said.

“They’re trying to make it look like a 401k plan,” she said.

Board members are considering the options; the board will revisit the 403b issue this summer in order to develop and approve a plan for 403b compliance this fall, said Jack Amadio, Superior school district business manager.

Anna Kurth covers education. Call her at (715) 395-5019 or e-mail akurth@superiortelegram.com.

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