Presentation on theme: "1 of 61 Your 403b Plan Your 403b Plan Foothill De-Anza Community College District David Creech, District Manager VALIC March 10 & 12, 2009."— Presentation transcript:
1 of 61 Your 403b Plan Your 403b Plan Foothill De-Anza Community College District David Creech, District Manager VALIC March 10 & 12, 2009
2 of 61 Agenda New 403(b) Regulations and Their Impact New 403(b) Regulations and Their Impact Changes to the FDA 403b Plan Changes to the FDA 403b Plan Loans and Hardships Loans and Hardships Retirement Planning Today Retirement Planning Today
3 of 61 Is VALIC secure and is my money safe? AIG, the parent company is a separate legal entity distinct from its subsidiaries that make up AIG Retirement. The Variable Annuity Life Insurance Company (VALIC) AIG Retirement Advisors, Inc. AIG Retirement Services Company The Fixed-Interest Option provides a fixed earnings rate and guarantee of fixed earnings rate and guarantee of principal backed by the claims-paying principal backed by the claims-paying ability of VALIC, and protected by Texas ability of VALIC, and protected by Texas state insurance regulations. state insurance regulations. Mutual funds or variable account options are invested in mutual funds regulated by are invested in mutual funds regulated by the SEC and owned by the shareholders. the SEC and owned by the shareholders.
4 of 61 Review of New 403(b) Regulations Review of New 403(b) Regulations Preparing for the Changes Preparing for the Changes 403b and 457b highlights 403b and 457b highlights Questions Questions Overview
5 of b Regulations and Your Plan Plan documents Universal availability Transfers and rollovers Investment products Contribution limits Roth 403(b) contributions
6 of b Regulations and Your Plan Hardship withdrawals Contribution limits Withdrawal restrictions Loans Minimum distributions
7 of 61 Released July 24, 2007 September 25, 2007 – Transfer restrictions imposed Effective date: January 1, 2009 Plan Documents must be in effect by December 31, (b) Regulations:
8 of 61 Written Plan: Some Key Requirements Must have written plan Eligible employees How eligible employees participate Distribution issues Products available under the plan: includes any contract and account that has received contributions in the plan, unless grandfathered
9 of 61 Approved Providers and Contracts Information Sharing Agreements All contracts and accounts issued under a group’s 403b plan are to be governed by a plan document starting no later than 1/1/09 unless grandfathered under the new transfer and exchange rules. If not, could become taxable
10 of 61 Part of Plan – or Not? Contracts and accounts established on or after 1/1/09 – Must be included in plan
11 of 61 Part of Plan – or Not? If the individual is a current employee, their active account or contract must be included under the plan. De-selected accounts or contracts will not automatically become taxable.
12 of 61 Transfers Under new rules: two kinds of transfers Under new rules: two kinds of transfers Transfers within plan called “exchanges”Transfers within plan called “exchanges” Transfers to another plan called “transfers”Transfers to another plan called “transfers” Subject to permission (from both plans if to another plan)Subject to permission (from both plans if to another plan)
13 of 61 Transfers: Information Sharing No information sharing: No transfer starting September 25, 2007 No information sharing: No transfer starting September 25, 2007 What is an information sharing agreement? What is an information sharing agreement? Purpose is to facilitate plan-level compliance, i.e. loan and distribution requirementsPurpose is to facilitate plan-level compliance, i.e. loan and distribution requirements
14 of 61 Universal Availability: What is it? Annual notice of eligibility
15 of 61 Distributions and Loans Coordination across multiple providers within the plan, and those governed by information sharing agreements
16 of 61 Excess Contributions Under the New Regulations: Contract ceases to be a qualifying 403(b) contract unless the excess is either: timely corrected, or separately accounted for from the outset
17 of 61 Consequences of Defects Final regulations provided clarification Individual defects do not infect accounts of innocent participants. Individual’s contract can cease to be a 403(b) contract. Example: single violation of withdrawal restrictions Contrast: universal availability applies to all
18 of 61 What is Happening Today? Current environment is very fluid and evolving. FDA is working with current vendors to determine their ability to meet requirements of new regulations. ISA and Hold Harmless in place. Some vendors have left the market. Some vendors are no longer be available.
19 of 61 What is Happening Today? FDA is working to maintain the greatest degree of investment options while meeting obligations posed by new regulations. Check District Payroll web site for “preferred and pending” vendors Stay tuned – still evolving!
20 of 61 Loan & Hardship Process To obtain a loan or hardship withdrawal Must complete a loan or hardship voucher. Obtain from FDA website. Complete voucher and loan/hardship paperwork from vendor. Provide to FDA for review. Forward to Vendor.
21 of b Accounts 2009 Max is $16,500 2009 Age Based Catch Up is $5,500 Cap Expansion = $3,000/yr. max, $15,000 lifetime max Loans are available
22 of b Deferred Compensation Operate side-by-side with 403b 2009 Max is $16,500 2009 Age Based Catch Up is $5,500 Separate Contribution Limits No Loans Available