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403(b)
Regulation Resources
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[Employer Plan: Exclusive use of the Church of God Retirement Plan] |
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| This information should not be considered tax or legal advice. The Board of Pensions stands ready to assist your organization as you work with your legal and tax advisers by providing resource information that you and your adviser may find beneficial. |
The Church
of God Retirement Plan
that your organization provides to your employees is a valuable
benefit to
them and for your organization as you seek to retain talented,
energetic staff. The Board of Pensions will help your organization understand
and comply with the new regulations so that your organization and
retirement plan participants avoid adverse tax consequences. The IRS published new regulations that
fully take effect on Jan. 1, 2009. These regulations — which
impact all 403(b) plans, including church plans — are not difficult to
implement if your organization's retirement plan is solely with the
Board of Pensions. Below, you will find explanations of the
regulations that impact your organization along with resources that
will help you move toward compliance.
But if you use multiple vendors, or if any contributions were
made after 2004 to a 403(b) issuer that will not be authorized to
receive contributions on January 1, 2009, there are special rules you
have to follow. Please
review the information prepared for organizations using multiple
vendors. Written
Plan Document Requirement ·
Identification of eligible employees ·
Statutory (legal) contributions limits ·
Time and form of benefits ·
Distribution restrictions The Church
of God Retirement Plan v.20100626 (pdf) provides general
documentation for most of these provisions.
However, because each organization has flexibility related to
certain plan provisions, your organization must develop and maintain
additional written rules and procedures regarding your arrangement that
address the following issues:
The Board
of Pensions makes compliance easy! To help you with this, the Board of
Pensions has prepared an Eligibility and Participation Schedule to
document the additional written rules and procedures, unique to your
organization, that relate to your use of the Church of God Retirement
Plan. In order
to comply with the new regulatory requirements, your organization needs
to take the following steps: Step 1
— Annually
review your copy of the Church
of God Retirement Plan
v.20100626 (pdf). Universal
availability.
Certain 403(b) plans are subject to annual retirement plan
nondiscrimination testing that demonstrates the plan does not
discriminate in favor of highly compensated employees in design or
practice. Plans subject to
testing include 403(b) plans of employers such as nonprofit hospitals,
colleges, universities and some children’s and retirement homes.
Under one of these nondiscrimination rules, plans of these
employers must satisfy the “universal availability” requirement.
In simple terms this means that if you allow one employee to make
personal tax-deferred contributions (salary reduction deferrals) to the
plan, you must let all employees make personal tax-deferred
contributions. Certain
limited groups of employees can be excluded from making personal
tax-deferred contributions to the plan, and these exclusions must be
stated in the written plan document.
For example, one of the groups of employees that can be excluded
from the universal availability requirement is “employees who normally
work fewer than 20 hours per week.”
Violation of the universal availability rule is best avoided by
allowing all employees to make Participant Before-Tax Contributions
(salary reduction deferrals) to the plan. Effective
opportunity required. As
a part of the universal availability requirement, the IRS wants to
ensure that employers take steps to make all employees aware of their
right to participate in the retirement plan. Therefore, the new
regulations require employers to demonstrate that employees are being
provided with “an effective opportunity” to make elective deferrals
(personal tax-sheltered contributions).
According to the IRS, whether this standard is being met depends
on specific “facts and circumstances” such as whether the employer
provides ongoing notice to employees of the opportunity to make elective
deferrals. In essence, the
regulations are sending a message to all employers to make, and continue
making, employees aware of the tax deferral opportunities available to
them under their retirement plan Requirement
to follow plan terms.
As mentioned earlier, all 403(b)
plans must be documented in writing.
A failure to follow these written plan provisions can result in
adverse tax consequences for individual plan participants and/or all
plan participants, depending upon the nature of the failure. The Board of Pensions has been dedicated to enhancing the financial security of our plan participants for well over 50 years. Our employees stand ready to help you. Please email us at Info@COGpension.org or call 1-800-844-8983 for additional information. Additional
resources: |
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Board of
Pensions of the Church of God |
