What is a 403(b) Plan?
The IRS provides an excellent mini-course in which a hypothetical Human Resources Manager answers questions from an employee about 403(b) Plans. It would be well worth your effort to spend the ten minutes or so required to listen to these questions and answers, but please be aware that this is a hypothetical situation and the features available in this hypothetical 403(b) Plan may not be available in your 403(b) Plan. In particular, a 3% mandatory employer contribution is mentioned as being part of the IRS hypothetical plan, but no such feature is available in any current 403(b) Plan administered by CCC, including your plan.
Top
My employer is offering an Early Retirement Incentive (ERI) program in which I may elect a lump-sum payment, a monthly stipend for a specified number of years, or a combination of these two. If I decide to participate, will I have the option to defer any portion of these payments into my 403(b) or 457(b) accounts?
No, ERI stipends are not eligible for 403(b) or 457(b) plan deferrals. If the agreement you are contemplating signing includes an option to contribute portions of the ERI stipend into a 403(b) or 457(b) account, please contact CCC and we will discuss this issue with your employer.
Top
Should I take a hardship withdrawal to meet needs resulting from the depressed economy?
If you do so, you need to be aware of the tax implications. Click here to read important warnings in a Wall Street Journal Digital Network article.
Top
I have received a check that is payable to my Employer. This check deals with a settlement stemming from an investigation into alleged market timing within the Scudder Family of Mutual Funds. What should I do with this checks?
Some of these checks appear to be payable to the Employer with no mention of the Employee, while others appear to be payable to the Employer for the benefit of the Employee. The best information available on this issue may be found on the Deutsche Asset Management Settlement Website Frequently Asked Questions page.
Portland Public Schools employees should visit Human Resources page on the PPS Inside website for additional information.
Top
Does CCC provide financial or investment advice?
No. CCC provides only compliance monitoring and plan administration services to its client Employers.
Top
Where should I go for financial or investment advice?
A number of resources are available on the web, but many people have neither the time nor the inclination to investigate these resources. Whatever your preference, check out useful links and the left-hand column of the vendors page of your Employer's section of this website, both for doing your own research and for information on financial planners and investment advisors located in your area.
Top
Does PERS affect my 403(b) or 457(b) contributions?
The general answer is no. You are allowed to contribute right up to your elective deferral limit into either or both of the 403(b) and 457(b) plans, irrespective of employee and employer PERS contributions.
The only situations in which PERS contributions impact your ability to contribute to 403(b) and/or 457(b) plans is when your gross salary is fairly low (about $13,000 per year for a single plan or $26,000 per year for both plans during 2004). Since contributions are limited to 100% of compensation, if employee PERS contributions are pre-tax salary deductions, they reduce your compensation. Consequently, they reduce the amount you can contribute to the 403(b) and/or 457(b) plans.
Important Observation: If you are employed by a CCC client Employer, you may request a free calculation of your maximum allowable contribution (MAC). Contact us to request your MAC calculation.
Top
Am I eligible for extra catch-up contributions?
You may be eligible for extra elective deferrals to your 403(b) plan if you will be 50 years or older or if you will complete at least 15 years of service by the end of the calendar year. You may be eligible for extra elective deferrals to your 457(b) plan if you will be 50 years or older by the end of the calendar year or if this year is one of the last three years before your normal retirement age. Click here for more details.
Important Observation: If you are employed by a CCC client Employer, you may request a free calculation of your maximum allowable contribution (MAC). Contact us to request your MAC calculation.
Top
Must all 15 years be with my current employer?
Yes! Just because you have 15 years of service with PERS covered employers (e.g., various Oregon public employers), that does not mean you are eligible for the "15 years of service catch-up." All 15 years of service must be with the Employer that employs you now. Click here for more details.
Important Observation: If you are employed by a CCC client Employer, you may request a free calculation of your maximum allowable contribution (MAC). Contact us to request your MAC calculation.
Top
What is the process to add a preferred provider to my employer's list of vendors?
The process for adding a "preferred provider" (our terminology is "Vendor with an Active Payroll Slot") may be found in Section 1.3(b) of your employer's 403(b) Plan Document on the CCC website. To get there, click on Employee Entrance button up top and then your Employer. Then click the green menu item: 403(b) Plan Document.
Top
Can I move 403(b) funds to another Vendor? to an IRA?
403(b) funds can be exchanged with and to a new vendor's 403(b) account, provided the receiving vendor has an Information Sharing Agreement (ISA) in place with the Employer. Rollovers [into an IRA] are only possible if you are eligible for a distribution, typically by attaining age 59-1/2 or severing employment. Hence, if you're under age 59-1/2 and remain employed at your current employer, then you would not be eligible to rollover your 403(b) account into an IRA. Additional information is available here: ISA List and at Transaction Definitions
Top
Are Life Insurance Policies no longer allowed in 403(b) accounts?
Although life insurance policies are not allowed in 403(b) accounts under the new regulations (except incidentally), such policies existing prior to 1/1/2009 may be maintained if you continue to remit contributions as you did prior to 1/1/2009.
Top
What's the situation regarding Required Minimum Distributions (RMDs) during 2009?
The Worker, Retiree, and Employer Recovery Act of 2008 waives 2009 Required Minimum Distributions (RMDs) from Individual Retirement Arrangements (IRAs), 401(k), Profit-Sharing, Money Purchase Pension, 403(b), and certain 457 retirement plans. Additional information about waiver is available from the IRS in their Retirement Plans FAQs regarding Required Minimum Distributions.
Top
Is it possible to use my 403(b)/457(b) account to purchase pension plan Permissive Service Credit?
Oregon: The answer is no at the present time. Oregon PERS requires use of after-tax dollars to purchase permissive service credit. However, Senate Bill 399 would change this situation if it were passed and signed into law by the Governor, but the effective date would be 9/1/2011. Hence, the only way to use 403(b) or 457(b) for purchasing permissive service credit in Oregon PERS at the present time is to obtain funds via a loan or a distribution.
Washington: The answer is yes. See Senate Bill 399 for documentation.
Top
I have received a package of corrective distribution documents from CCC informing me that I exceeded my elective deferral limit last year and must sign and return the documents for further processing and report the excess deferral amount on my tax returns for last year. Please explain?
Carruth Compliance Consulting, Inc. (CCC) serves as Third Party Administrator (TPA) for the 403(b) Tax Sheltered Annuity (TSA) Plan of your employer. One service CCC provides is testing contributions for compliance with IRS imposed contribution limits. One catch-up provision allows extra deferrals for certain employees who have accrued 15 or more years of FTE service through the end of the calendar year in question, but determination of eligibility for extra deferrals under this catch-up provision requires collection of significant amounts of historical service and contribution data.
The following steps were taken by CCC in attempts to obtain sufficient human resources, payroll, and vendor remittance data to verify your eligibility for up to $3,000 in additional elective deferrals under the 15 Years-of-Service Catch-up Provision found in Section 402(b)(7) of the Internal Revenue Code:
1) We requested that your employer provide data as far back as such data were available on current systems;
2) Either we didn't receive data at all and had to work with ad hoc information provided by your employer or we received insufficient data to determine eligibility for catch-up contributions;
3) When data received in Steps 1) and 2) were insufficient to determine eligibility, we requested from your employer either copies of your historical W-2 Forms or copies of your historical Salary Reduction Agreements;
4) Since data received in Steps 1), 2), and 3) have proved to be insufficient to determine eligibility, the only options remaining are for you to provide copies of your W-2 Forms or copies of your year-end check stubs to verify historical contributions.
Absent receipt of either historical W-2 Forms or historical year-end check stubs, we must request that you sign the corrective distribution documents and return them to us for submission to your vendor by March 15, 2010, so that the corrective distribution may be made by April 15, 2010.
Neither your employer nor CCC can force you to sign and return the corrective distribution documents. However, we need to inform you that based on information CCC has been provided, you have exceeded your elective deferral limit. If you fail to sign and return to CCC the corrective distribution documents, your 2009 tax return is audited by the IRS, and the IRS finds that you did, in fact, exceed your elective deferral limit and failed to process a corrective distribution, then the excess deferral will be taxable during 2009 (likely requiring you to file an amended tax return) and the excess deferral will be taxable again when it is distributed (resulting in double taxation of the excess deferral that was not timely distributed).
If you have additional questions, please contact either Heather Mondor or Harvey Carruthat CCC.
Top