Hi, as promised I would discuss some of the topics covered at the
PASBO conference two weeks ago.
One of the relatively new
regulations to come to public school Districts is the
regulation of 403B plans from the IRS.
403B plans are investment plans similar to a 401K but used in the non-profit/education sector. For years the schools made payroll deductions and remitted the money to the various
TSA Companies (
AUL, Lincoln,
ING, etc..) with no real paper trail or way making sure that the employees were following IRS rules in handling these accounts.
In August, 2007 the IRS issued Procedure 2007-71 which set guidelines for the administration and monitoring of these accounts effective January 1, 2009.
The key change was that the school districts were to appoint a Third Party Administrator (
TPA) to monitor all transactions between their employees and their respective
TSA's.
This change has led to school districts (an other non-profits) in developing an action plan that would be compliant under the IRS rules. Not only would current employees be monitored but any employee with a 403B after January 1, 2009 who left your employment would have to be tracked for compliance.
Most School Districts in Washington County selected a independent
TPA to handle this issue. The costs were small and it enable Districts not to tie up hours of staff time dealing with paper work.
How these
regulations play out in the long run remain to be seen, but hopefully this will prove to be one Federal
Regulation that doesn't cause too many headaches.